The hypermarkets are dead, consumer trends - Ben Cavender

Ben Cavender

Brands and the origins of brands have come a key consumer trend, retail analyst Ben Cavender told a fruit conference in Shanghai, according to fruitnet.com. The hypermarkets and first-tier cities are out, he said.  

Fruitnet:

 “The focus shouldn’t be in first-tier cities,” Cavender told delegates, adding that the key to success is to focus on developing trust among consumers in tier-two and tier-three cities. “There’s been a lot of changes in the past five to ten years in how consumers see the world.” 

Pollution, food safety and the crackdown on corruption have all influenced consumer trends, with a move away from tangible items towards ‘experiences’ and premium, healthy food – an opportunity for the fresh produce industry to make inroads in China's emerging markets. 

As a result, branding and brand origins are increasingly important, said Cavender, adding that companies should focus on what their brands stand for and building a story behind their brand. .. 

While there is a transition to high-end grocers, in tier-two and tier-three cities demand is outstripping supply, with consumers increasingly travelling overseas and to tier one cities, seeing the produce and products available, and so turn to online retailers to meet their demands. 

“Ten years ago it was about the hypermarkets – they were the premium space. Now, hypermarkets are dead to the consumers – they don’t like the shopping experience,” Cavender said. 

More at Fruitnet.com

Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

Are you interested in more experts on branding at the China Speakers Bureau? Do check out this list.     

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Finally: legal rights for China´s consumers - Mark Schaub

Mark Schaub

Legal protection for China´s consumers was long overdue, but a revision of the existing laws might change all for the country´s consumers, writes lawyer Mark Schaub in Lexology. All depends now on how those laws are being executed.

Mark Schaub:

In short the Revision basically changes everything for consumers in China. As always, only time will tell as to how it is implemented but the intent is clear – consumers will be given greater protection. 

There any many reasons that reform was due (or even overdue). The Revision which took effect on March 15, 2014 – fittingly the next World Consumer Rights Day – provides PRC consumers with better standards of protection. These amendments addressed the rapid emergence of online retail, tightened protection of consumers’ personal information, increased penalties for violations of consumer rights, established a consumers’ public interest litigation system and re-adjusted the burden of proof in consumer transactions. 

Protection is Needed – Chinese consumers have legitimate concerns in respect of product safety and quality. The State Administration for Industry and Commerce (SAIC) itself has noted that RMB 3.8 billion worth of poor quality products were sold in China between 2010 and 2013. Consumers need protection from threats as varied as tainted food to exploding electronics. Also in the news in 2012 were serious breaches of citizen privacy. 

Unfair Practices – the Chinese authorities have been very active in 2014 in relation to alleged anti-competitive practices by international and domestic companies alike. The actions were as varied as infant formula to spirits and from luxury cars to pharmaceuticals. In addition the Chinese media was very sensitive to cases where international companies allegedly applied a double standard to the Chinese consumer. 

China Retail has Changed – China’s previous consumer laws were promulgated prior to the advent of e-commerce. As a result, the current legal framework does not address numerous consumer concerns related to online shopping. China’s rapid approach to being the world’s largest online market coupled with it often being at the vanguard of online shopping innovation means that this law was long overdue.

More details at Lexology.

Mark Schaub is a speaker at the China Speakers Bureau? Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more experts on risk management at the China Speakers Bureau? Do check out this list.  

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Will China´s consumers keep on spending? - Sara Hsu

+Sara Hsu 

China´s central government tries to shift its economy from investment-driven to a consumer-drive one. While the effort seems to have effect, financial analyst Sara Hsu points at a few bears at this road in the Diplomat. Will the consumers keep on spending more? It´s in the hand of the government itself.

Sara Hsu:

First, the crackdown on official purchases of luxury goods has taken a toll on consumption. Diageo, a drinks maker, reported a $444 million decline in sales in the fiscal year ending June 30. Most of this decline reflected a sharp reduction in demand for its popular white liquor, baijiu, through its subsidiary company Shui Jing Fang. Diageo is one of many luxury goods companies that has been adversely impacted by China’s anti-corruption campaign. At the same time, China’s mainstream consumers are increasingly aware of, and interested in purchasing, luxury brands. While the anti-corruption campaign has made a dent in luxury spending in the short run, in the long term high-end consumption is unlikely to be affected.

Second, the construction of retail centers that remain empty has occurred in recent years, as lack of growth sources from other sectors prompted government officials to allow a stark increase in fixed asset investment, including real estate development. Many owners of these shopping areas will likely experience heavy losses, as they fail to attract either stores or shoppers. Despite this problem, consumption in hot spots throughout China remains strong. The trend in consumer preferences for shopping locations changes, and has not negated the overall upward movement in consumption numbers.

Real threats to increasing consumption in the long run do exist, however, and have to do with the rate of hukou, or household registration, reform, and the urbanization process itself. The hukou process has long prevented rural residents from permanently moving to urban areas, and the leadership has vowed to reduce hukou restrictions for some. The extent to which this policy is carried out will greatly impact the sustainability of the consumption trend: the rural sector remains relatively worse off than the urban sector, and the hukou remains the biggest formal barrier against urbanization and the associated increase in living standards. Closely related is the urbanization process, which has focused on physically moving individuals to urban areas without ensuring appropriate job creation. By implementing urbanization policies in a superficial way, some regions have raised living standards in the short run without creating the means to sustain it in the long run.

The tide of consumer spending is growing in force, and the leadership does not want to see it end. While the current lag in luxury spending and real estate occupancy may be temporary, serious barriers to building a consumer society remain. Ironically, these barriers are in the hands of the government itself. The policies that are implemented, and the order in which they are carried out, will determine if the ultimate goal of raising and maintaining consumption can be achieved.

More in the Diplomat.

Sara Hsu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you interested in more financial experts at the China Speakers Bureau? Do check out our recent list.  

Affordable fashion gives boost to fast brands - Ben Cavender

+Benjamin Cavender 

High-end brands are no longer the only winners in China´s luxury industry, as affordable fashion gets the favor of consumers, and high-costs items are mostly purchased outside China, explains business analyst Ben Cavender in the China Daily.

The China Daily:

Ben Cavender, an analyst at the China Market Research Group in Shanghai, said the aggressive expansion of fast fashion brands including H&M and Uniqlo is the result of rising interest among Chinese consumers in products that offer style and quality, instead of premium brands in luxury categories. He said the quick expansion of these companies indicates that more fast fashion brands want to make sure they are building relationships with Chinese consumers early on before these shoppers become familiar with too many other competing brands.

"Chinese consumers are more sophisticated and have more understanding of products," he said. The government's austerity campaign has also created an environment that has encouraged consumers to avoid being too flashy and obvious, which has cut into the popularity of luxury brands, Cavender added.

In addition, he said that Chinese consumers still like luxury goods, but most of their purchases are made outside of China because domestic prices are higher for the same items.

Cavender noted the importance for fast fashion retailers of building market share by designing for local customers in terms of fit and style. Designing for China could raise some costs but it makes sense in the long term, he said.

Beyond sprucing up physical stores to attract more customers, online shops can offer a major boost, said Cavender. He said that e-commerce is a boon for regions that don't have as many malls as first-tier cities. It's also ideal for customers who are too busy working to go shopping.

He cited Uniqlo's collaboration with Tmall as an example. Cooperating with Tmall, the leading e-commerce platform of Alibaba Group Holding Ltd, often helps fast fashion retailers to increase their sales. "Brands will have more control if they have their own website, but it is difficult to get the same amount of traffic as Tmall," he said.

More in the China Daily.

Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you interested in more speakers on China´s luxury industry at the China Speakers Bureau? Do have a look at this recent list.  

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