Market research China Archives - Daxue Consulting - Market Research China

Sportswear market in China


A range of latest trends, brands of sportswear have arrived in the markets of China. A number of Chinese companies have come up that specialize in sportswear for males, females as well as kids. To suit the special requirements Read more

Harbin Beer in China


Harbin Beer: Chinese beer expert Being founded by a Russian businessman in 1900, Harbin Brewery Group Ltd is one of the eldest beer companies in China. After the foundation of the PRC, Harbin beer  got some governmental financial aid, and Read more

Market of chocolate in China


China is considered as the world’s largest producer of sugar and  has also become the largest producer of chocolate. Mars Group, the major chocolate manufacturer in China is contributing the major part of the  Chinese economy. About 70% of Read more

Retail of Wine in China


Wine's culture is still emerging in China According to a popular industry report, the scale of retail of wine in China is about 60 billion to 70 billion yuan. In 2013, it was expected to exceed 90 billion yuan, and Read more

Weibo can still be useful for Fashion and Luxury Brands in China


Recently, China’s biggest microblogging platform, Sina Weibo, is facing the challenging competition for popularity and engagement against WeChat. Many marketers are saying that it is no longer necessary to give a strong focus on a brand’s Weibo campaign, however Read more

Healthcare market in China


China is a diverse and growing market place in the World and many of the leading global corporate organizations have their offices here. The pharmaceutical market is considered as one of the main sectors in the economy of China, Read more

Development of coffee market in China


As standard of living in China continues to improve recently, foreign drinks such as coke and coffee are accepting by an increasing number of Chinese. Coffee is gradually relative to fashion and taste in China, and it becomes a Read more

How Nestle reacts to the events on Baby food market in China


Nestle Group, headquartered in Switzerland, is a food manufacturer with a long history in China. Nestle company, originally started with the production of baby food, and then kept as well further developed this business all over the world. Now, Read more

Coca-Cola in China, development and competition with Pepsi


Marketing Strategy of Coca Cola in China Coca Cola, as the world's largest beverage company, has a history of over 110 years. The brand opened its first bottling plant in China in 1927 in Tianjin and Shanghai. It continued its Read more

The difficulty of infant formula market in China : the example of Karicare


Karicare is a leading infant formula brand of the global maternal and child nutrition experts Nutricia. Karicare has been founded in 1896, developed by Dr. Truby King with the incentive of “Help fatigued mothers, protect cute babies". After a hundred Read more

Internet of Things in China

by thibaud

Online market China

What is Internet of Things

The Internet of Things could be the next big technological breakthrough in the world can look forward to. This new technology that aims to link all the physical objects in our real life will play a key role in the next generation of information, networks and communication. Internet of Things of IoT has become a popular buzzword in the recent times. Now what exactly do we mean by this? Internet of Things broadly means that most of the daily objects of use in our lives can be uniquely identified and linked together through a network with various technologies, thereby sharing data and enabling interaction to make our lives smoother and more convenient leading to countless possibilities. Technologies like the RFID (Radio Frequency Identification Device), short range wireless communication, real time localization and sensor networks are playing a crucial role in the commercial implementation of this technology that links the physical and cyber space for individuals as well as corporate bodies.

Investment in China

Internet of Things brings with it opportunities as well as challenges. Though research and development about this new concept is taking place in most countries of the world. China seems to take the lead in this regard with the country, hoping to invest a whopping 5 billion yuan ($800 million) in the Internet of Things industry that is expected to grow upto to 500 billion yuan ($80.3 billion) by 2015 then double to 1 trillion yuan ($166 billion) by 2020.

China leading in developing Internet of Things

Since Internet of Things is the next big thing, waiting to be explored and tapped commercially, it is expected that it could require investments up to trillions of dollars. Competing with the developed economies, the Chinese government is pretty much surging ahead to  encourage this new concept by treating it as an opportunity for domestic innovation and promoting it in every possible way including backing it by national policies. For example, special state-owned zones have been developed like the Chengdu Internet of Things Technology Institute in the Sichuan province that is developing a special health care system in which the villagers can simply step into a telephone booth sized “health capsule” for a diagnosis and a prescription from a doctor who is distantly located.

Reasons for China leading Internet of Things

Internet of things China

Till date most technologies were developed by the leading economies of the world with most of the Asian nations being followers who paid royalties for using that technology. However, for the Internet of Things it is a different ball game altogether. This time around, China is all set to lead the world with several factors favouring the Asian major. Firstly, China is in a position to invest more than any other country of the world. Secondly, China has an internalized and walled internet that allows it to monitor, control and censor usage and since the internet forms the basis of this technology, this is an important determinant in the successful implementation of the technology at all levels. Thirdly, China is no longer a low cost labour centre and is really hoping to build and create its own indigenous brand in the next generation of technology.

Amy Wang, online survey China

References

http://www.china-iot.net/iThings2013.htm

http://edition.cnn.com/2012/11/28/business/china-internet-of-things/

http://www.chinaexhibition.com/trade_events/3303-IOTE_2013_-_The_5th_China_International_Internet_of_Things_Technologies_and_Application_Exhibition.html


Meituan, the leader of online group buying websites in China

by thibaud

Meituan.com started in Beijing in 2010. It is the market leader in the China group buying industry since 2012. The company has dramatically grown since 2011. It has now with nearly 16,440,000 active customers and over $2.6 billion transaction volume in 2013. Meituan, the leader of China online group buying market

Though it showed tremendous growth and leading market share, Meituan has struggled for the past 3 years with competitors like Lashou, Dianping and even Taobao’s sub group buying sites Juhuasuan for market shares. Moreover, Meituan plans to realize 100.000.000.000 RMB market transaction volume by 2015.

Meituan transaction volume

Source: Tuan 800.com

Thus, strategies Meituan implemented have dragged the company into its current leading place.

5C analysis-an analysis of Meituan website

Meituan China
The 5C Analysis originally consists of 5 elements of internal, macro and micro environmental situation: Company, Collaborators, Customers, Competitors and Climate. However in an online environment of electronic business, we incorporated the adapted 5C analysis to provide better understandings of the elements of a website. The adapted 5C Analysis comprises of 5 different aspects of an electronic business: Company, Collaborators, Community, Content and Connectivity.
Company
Meituan’s product strategy is focusing on providing local service while Meituan goods-sales remains less than 10% of its total market volume. Nevertheless, in June 2013, Meituan acquired 100% shares of Mengmai.com which is a goods-provider in group buying industry. But this doesn’t affect much for Meituan goods market performance in 2013.
When it comes to the pricing policy, it is hard to measure how much total price difference among different group buying websites without doing deeper market analysis. But looking at the price range where above 50% merchants offer on Meituan website can help release the problem. We can see that as a discounted price offer, Meituan studied the market and customer behavior very well. It not only provides the customers with well accepted price range, but also enlarges the service scope for which customers can choose. The reported data reveals that the whole China group buying industry charges around 5-10% from its suppliers. Meituan charges around 10%. Compared with Groupon American’s average 40-50%, Meituan makes less money on its core business. Together with high promotion and labor costs, it took Meituan 3 years’ to start making money.
Content
Meituan puts its major technical efforts on improving user experience.
  • Merchants can modify the price and pictures from the backstage system easier than other platforms.
  • Customers can use search engine, 3 navigation bars to look for the exact products instantly.
Besides, the overall structure of Meituan’s homepage is characterized by a rather appealing appearance.The colors white and green dominate the overall theme, leading to a relaxed and comfortable atmosphere while orange is used to stress anything that should be highlighted. The homepages of all cities in which Meituan is available share the same outline, construction and design. However Beijing, Shanghai, Shenzhen homepage differ a bit, which is due to additional services available there. Nevertheless most of the online presence is the same. To conclude, user experience plays a vital role for Meituan’s business model.
Community
Even though, Meituan is well connected to social network sites such as QQ, Weibo, Douban, Qzone, it is still limited in cultivating its own community, with less attention paid to customer interaction. In contrast, the American group buying originator-Groupon launched 3 Groupon platforms to establish the community among customers. In this business model, customer interaction plays a vital role for Groupon: Firstly, spreading the news of a deal in a wide community helps attracting people needed for realizing a deal, and secondly, maintaining a community helps protect against competitors. Thus, cultivating an own community is a key part of Groupon’s marketing strategy.Altogether, Groupon site is well connected to social networks and the company actively and successfully promotes socializing and building communities among their subscribers.
Connectivity
  • Search for the websites:
When searching on the web for Meituan, the search engines provide an enormous amount of correct hits. Baidu gives 100.000.000 results, Bing 1.100.000 results, Google 395.000.000 results, Yahoo! 24.900.000. The hits from Baidu even show direct links to specific Meituan cities: Beijing, Xi’an, Linyi, Taizhou etc. The Meituan.com website can be accessed from all popular browsers (Windows Explorer, Mozilla Firefox, 360 and Google Chrome). Anytime when switching on the computer and browsing for www.meituan.com, one chooses a nearby city and enter with cooperative websites’ usernames and passwords. You can also “visit” the page without leaving any personal data.
  • Sign in
There are two ways to browse through the Meituan page: by signing in with one’s register e-mail address or by using cooperative websites’ user name and passwords. However, there is no substantial difference between both ways.
  • Navigating websites
Navigating through the website is facilitated by 3 navigation bars; one on the left, one at the top, one on the right. All provide efficient group selling product information.
Collaborators
To conduct its business, Meituan relies on different kinds of partnerships with merchants, data centers, and other internet platforms. Partnerships with merchants provide the basis of Meituan’s business as merchants provide discounts. Thus, today, Meituan partnered with over 300,000 merchants across China. The company also provides technical support platform for its partners by offering tailor-made services and marketing plan. On the other hand, partnerships with Internet platforms such as search engines or social networks, such as Weibo, are developed. Teaming up with search engines, e.g. Baidu, gives Groupon a competitive advantage as their ads will pop up first in the advertisement bar and those of competitors further down. Weibo is an extremely valuable partner for Meituan as the brand has its own Weibo pages and use this social network as the main communication platform with followers. Beside, partnership with Xiecheng provides company with well guaranteed hotel service.
To know more about online shopping in China, please contact us


What are the differences between Chinese and Western consumers for luxury goods?

by Daxue Consulting

luxury brands in China

A substantial growth in China’s luxyry goods market mainly thanks to young consumers

China is the second largest country in terms of luxury goods consumption after Japan. By March 2011, the total amount of its consumption has reached 107 billion U.S dollars, accounting for 27.5% of the global luxury goods market.  It seems that the recent global economic recession has not affected the Chinese luxury goods market as it hit other Western countries. According the Economist, Andrew Keith of Lane Crawford, a high-end department store that first opened in Hong Kong in 1850, reports no slowdown at his stores there or in Beijing. Burberry, a British fashion brand, enjoyed sales growth in China of about 20% in the year of 2013 to March. Bain & Company estimates that “luxury sales in greater China (which includes Taiwan, Hong Kong and Macau) will grow by 6-8% this year, to exceed $35 billion, making it a luxury market second only to America”. Thus, it is vital to differentiate Chinese and Western consumers to profit from Chinese market.

Young people play an important role in the consumption of luxury goods in China. In China, around 75% of the luxury goods are purchased by people under 40. According to market research in China on luxury goods, respondents of age 21-30 were from first and second-tier Chinese cities as well as Hong Kong and Taiwan, more than half of them have annual income under 180,000 RMB (approximately $29,694). It is found that 92% of the mainlander group claimed that they intend to purchase luxury goods while only 20% of Taiwanese would do so. The young consumers used these expensive purchases as self award and they would rather save up two or three months’ salary for one piece of luxury goods. People of 20-30 also account for the first generation of “one-child policy”; this generation is arguably more self-indulged. They would rather dress up with flashy and logo-visible apparels and handbags than the globally popular high street brands such as Zara of H&M. On the contrary, Western luxury goods consumption centers on older age group. It is found out that the age group of German luxury good consumption is between 40 and 70, similarly to most Western countries. Meanwhile, Chinese of 50 and older do not have the habit of extravagant purchase. This young trend also indicates that the Internet is widely used to browse, research and purchase products. However, fewer than 20% of the established luxury goods consumers in Germany have shopped online.

Chinese consumers are more inclined to purchase luxury goods

luxury goods market in China

Psychologically, there are quite a few fundamental differences among the Chinese and Western wealthy consumers. The history of consumerism and materialism is much shorter in China as the market was not opened until the 80s. Thus, the nouveau-riche in China is more of a new social class compared to the established upper-middle class in the West. This can explain the rather irrational consuming pattern of some Chinese consumers. On average, people are willing spend 4% of their “money” on luxury goods, while certain Chinese female would spend 40% or more.

The categories of luxurious consumption of Chinese and Western consumers are different. Chinese consumers are more material-oriented: their luxurious purchase is mostly on clothing, cars and watches that can show off their fortune and social status, whereas in Germany, the consumption on luxurious vacation and other life style services (spa, massage and/or even extreme sports) are more popular. The traditional concept of luxurious goods, such as champagne, restaurants, is less attractive in Germany. The once pioneer high-end brands such as Calvin Klein and Armani are back to cheaper pricing to appeal to German consumers.

Uniquely, the social implication of luxury goods in China is personal and beyond.  Interpersonal relationship is highly valued and useful in China. It is argued that luxury goods are the best presents in China. According to a Bain& Company survey in 2010, more than 20% of luxury purchase was aimed at gifting; this has been a booming trend. Furthermore, the launch of gift cards of the department stores not only facilitates the gifting process but also broadens the choice of luxury goods consumers have. Banks also launch similar gift cards that allow foreign transactions. However, Western consumers are motivated by the exclusive personal experience: service and ambience are important factors that motivate their consumption.

Amy Wang

Works quoted :

http://wenku.baidu.com/view/b936cf6aaf1ffc4ffe47ac15.html

“Beyond bling; Luxury goods in China.” The Economist 8 June 2013: 65(US). Academic OneFile. Web. 27 Dec. 2013.

“China: Post-80s Lap Up Luxury Goods.” Asia News Monitor Nov 30 2011. ProQuest. Web. 27 Dec. 2013 .


Automotive Industry in China

by quentin

Market Overview

China’s automotive sector grew at a annual compound average rate of 24 percent between 2005 and 2011 and, in 2010, overtook the United States as the largest single-country, new-car market. Based on forecast from McKinsey, the growth of China’s auto market will slow to an average of 8 percent on a per year basis between 2011 and 2020 – which is still a very fast increase according to developed-world standards. Sales are forecast to reach 22 million in 2020.

Annual car sales growth rate

 

Detail Market Structure

In fact, many of these brands belong to one manufacturer. From the table we can conclude the fact that foreign brands grab most of these market shares. There is another interesting thing about these brands: Chinese customers usually find it difficult to distinguish foreign brands from local brands just by their name. This can be a strategy for local brands to respond to customer’s foreign brands preference.

 

Second-hand Car Market

Currently, the sales of second-hand autos are one-fifth of the whole market in China. In a mature market like America, the sales of second-hand autos are 1.4 times more than new ones. Therefore, China’s second-hand autos market has huge potential despite the strong cultural pattern which favorites new cars purchase.

Foreign and Local Automakers

Foreign automakers must have a local partner to make cars in China. The policy was conceived in the hope that Chinese carmakers would absorb foreign technology and management expertise. After three decades, foreign brands dominate the market and Chinese brands are steadily losing ground and the rationality behind the joint-venture policy has come into question.

Foreign manufacturer cars took 73 percent of the market share from January to October in 2013, a slight rise of 0.4 percent from the same period of the previous year, according to the China Association of Automobile Manufacturers (CAAM).

Angry voices have been raised as Chinese automakers, in cahoots with their joint venture associates, launch so-called “self-developed” and “local brand” cars. These are nothing more than cut price, rebadged and relaunched versions of foreign models that have gone out of production.

Famous Brands on Automotive industry in China

Automotive Industry in China

Advertisement expenses

Foreign auto makers are increasing spending on marketing to reach Chinese consumers. The five biggest joint ventures between Chinese and foreign auto makers—including arms of VW, GM, Nissan and BMW AG —spent 9.5 billion Yuan ($1.6 billion) on advertising in the first 10 months of 2013, up 8% from a year earlier, according to Nielsen-CCData. U.S. auto makers GM and Ford this year sponsored popular television singing competitions.

Ford

Ford’s China sales surged to about 840,000 vehicles in the first 11 months of this year, up more than 50% from a year earlier amid an effort to double production capacity in the country by 2015. The car maker has said it will introduce 15 new models in China between 2011 and 2015, including the luxury brand Lincoln and the classic Mustang muscle car.

“The Chinese like a little bit more room in the back seat, they like a little bit more chrome on the front,” said David Schoch, president of Ford’s Asian-Pacific region. “So we are taking into consideration the Chinese wants.”

Hyundai

Hyundai has focused on midsize, compact vehicles and China-exclusive models, such as the Yuedong, Langdong and Mistra sedans. Analysts said Hyundai’s adoption of European-style designs has catered to the taste of Chinese consumers. The South Korean company had 7.4% of China’s auto market in the first 11 months of 2013, up from 7.1% last year.

Toyota and Nissan

Japanese auto makers Toyota and Nissan are still grappling with the fallout of a territorial dispute between Japan and China that led Chinese consumers last year to scorn Japanese brands. Nissan has said that it aims to raise its share of China’s auto market to 10% over the medium to long term from less than 6% now.

Toyota is on track to meet its goal of selling 900,000 vehicles in China this year and plans to reach more than one million next year, said spokesman Niu Yu. “In the future we will focus on low-cost cars and hybrid vehicles,” he said.

Amy Wang

To know more on the Chinese Automotive market, please contact us.

Resources:

 


The success of Taobao on the Chinese Internet

by thibaud

Taobao was founded by Alibaba Group on May 10, 2003. Taobao is an online e-commerce market place which facilitates consumer-to-consumer (C2C) retail by providing a platform for small businesses and individual entrepreneurs to open online retail stores that mainly cater to consumers in China, Hong Kong, Macau and Taiwan. C2C process Taobao

Sellers are able to post goods for sale or resale on Taobao either through a fixed price or by auction. Buyers can assess seller backgrounds by information available on the site, including ratings and reviews.

There are factors contributing to Taobao’s success:

1)    Low cost incurred on sellers and no cost on buyers

To counter eBay’s expansion, Taobao offered free listings at the first few years to sellers and there were no additional charges for transactions carried out in between sellers and buyers. This heightens the interest for sellers to set up online shops on Taobao and the wide array of choices for marketed goods also encourages buyers to shop via Taobao.

2)    User-friendly website features

 Taobao introduced website features designed to act in the best interests of local consumers, such as an instant messaging tool (Aliwangwang) for facilitating buyer-seller communication and a payment tool( Alipay). As a result, Taobao became the undisputed market leader in mainland China within two years. Its market share surged from 8% to 59% between 2003 and 2005, while eBay China’s plunged from 79% to 36%. Finally, eBay shut down its own site in China in 2006.

Taobao played on the weaknesses of its competitors as on its own strengths and it seized the opportunities it was given and overcame the threats in starting out as a new e-commerce mall.

3)    Diversification of marketing models

In April 2008, Taobao introduced a new B2C platform called Taobao Mall to complement its C2C marketplace. Since then, Taobao Mall has established itself as the destination for quality, ostentatious goods for Chinese consumers. Taobao Mall launched an independent web domain, Tmall.com, and enhanced its focus on product variety and improvements in shopping experience in November 2010. It became an independent business in June 2011 and changed its Chinese name to Tian Mao (Tmall) in January 2012. As of October 2013 it was the eighth most visited web site in China.Diversification of marketing models China

 

In October 2010, Taobao beta launched eTao as an independent search engine for online shopping, providing product and merchant information from a number of major consumer e-commerce websites in China. Online shoppers can use the site to compare prices from different sellers and identify products to buy. According to the Alibaba Group web site, eTao offers products from Amazon China, Dangdang, Gome, Yihaodian, Nike China and Vancl, as well as Taobao and Tmall

Etao China Emarketing

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In May 2011, Alibaba Group opened a physical furniture store in Beijing under the Taobao Mall brand. The five-story 25,000sqm Taobao Mall iFengChao Furniture Showroom opened as a complement to their online stores. Taobao stepped out of the traditional boundary of an e-commerce mall and meet up to the demands of a brick and mortar store as well.

In June 2011, Alibaba Group Executive Chairman and former CEO Jack Ma announced that Taobao would be split into three different companies: Taobao Marketplace (a C2C platform), Tmall.com (a B2C platform; then called Taobao Mall), and eTao (a search engine for online shopping ). The move was said to be necessary for Taobao to “meet competitive threats that emerged in the past two years during which the Internet and e-commerce landscape has changed dramatically.”

Taobao’s varied and flexible marketing models made it possible to fulfill the constituents in the strategic 4Ps marketing.

4)    Powerful promotional efforts

Taobao’s strategic alliances with Chinese Internet portals such as 21 CN, Sohu and MSN enabled the establishment of long term cooperation with each other that is mutually beneficial. In recent years, Taobao is also depending on advertisements through commercial movies and famous TV programs to promote itself. The power of media imposed a successful marketing effect.

On April 29, 2013, Alibaba announced an investment of USD 586 million in Sina Weibo, a Chinese microblogging website. According to Reuters, the deal “should drive more web traffic to Alibaba’s Taobao Marketplace, China’s largest e-commerce website with a consumer focus.” On August 1, 2013, Alibaba launched Weibo for Taobao, which allows users to link Sina Weibo accounts with Taobao accounts. This cross-marketing of e-commerce malls with social networking sites will be sustainable as long as Sina Weibo remains widely in use.

5)    Corporate cooperation with banks

Taobao undertakes economic cooperation with the various major banks in China such as ICBC, BOC, etc to ensure a trustworthy transaction of banking system for the sales carried out through Taobao. This cooperation will enable the banking transactions carried out on its website to be full proof against fraud and deceive. This made online banking possible and it is thus more convenient to shop online as compared to brick and mortar shops.

From 2012 onwards, Taobao began to accept international Visa and MasterCard credit cards while AliPay supported domestic bank cards. The plan to support international credit cards was announced in late 2011 and this is a great foresight of  Taobao noting the high demand in e-commerce market. It is also a big leap taken by Taobao to bring their e-commerce business to a global level.

China online transaction

Daxue Global retail E-commerce

 

 

 

 

 

 

 

 

 

More information about online research in China

E-commerce in China: Taobao 

E-commerce Business Models

Taobao, Wikipedia 

 

Amy Wang