2016: when China´s consumers went crazy for sports - Jeffrey Towson

Jeffrey Towson

Peking University business professor Jeffrey Towson notes at his LinkedIn page that many consumers at the Beijing subway have started to wear sports wear. Adidas is one of the winners in a convincing trend towards a healthier lifestyle, he argues. Although he expects this catches on among women more than smoking men.

Jeffrey Towson:

First: This is a sportswear fashion fad and it is great for companies like Adidas. 

The best symbol of this fad is Adidas AG, which is opening China stores at a frantic pace. The German sportswear company has about 9,000 China stores now. And they booked China revenue of $2.5 billion last year, up 18% from the previous year. 

In March 2016, Adidas announced plans to open 3,000 more China stores in the next five years. And they will double the number of China cities in which they operate. This makes them one of the most aggressive retailers in China right now. Nike and Under Amour are also popular foreign brands and are benefiting from this fad. 

However, it is worth remembering that just 2-3 years ago sportswear companies, particularly Li Ning and Anta, were struggling. Many were booking losses and accumulating inventory. Li Ning has now reported revenue up 13% year-on-year and their previous losses have turned to a profit (albeit a small one). 

Overall, this fad is good news. But one should be careful not to mistake it for a longer-term trend. Chinese consumers can be pretty fickle. Uniqlo (my favorite store in China) is currently selling some type of "sweat pants-meets-jeans" hybrid, which you're supposed to wear as regular clothes. It's weird. 

Second: The movement towards healthier living by Chinese consumers is a real long-term trend. But right now this could just be Chinese moms. 

The McKinsey 2016 China Consumer report had some nice numbers on the increasing focus on "healthy living" across China. Having interviewed +10,000 consumers in 44 cities, they found the middle class is focusing more on eating healthier and safer food, practicing preventive medicine and participating in sports. 

In the near-term, this trend is showing up as a decreased preference for Western fast food (bad for KFC), less drinking of soda (bad for Coke) and more foreign vitamins and milk powder (good for Nestle). Longer-term this should also lead to more exercise, more healthcare and premiums for quality goods. 

However, I suspect this trend today is still mostly about Chinese wives and moms. This is the group that cares most about health and safety - and they also control most of the household spending. It is worth keeping in mind that while only 2-3% of Chinese women smoke, +66% of Chinese men will still start smoking. Healthy living is probably more a female phenomenon overall.

More at Jeffrew Towson´s LinkedIn page.

Jeffrey Towson 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.

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Disney link gives Uniqlo an extra advantage - Ben Cavender

Ben Cavender

Ben Cavender[/caption] Japan´s fashion brand Uniqlo is already leading in the China market over its Western competitors, and its link with Disney might give it an extra advantage, says retail analyst Ben Cavender in MarketWatch.

Market Watch:

The partnership (with Disney) is global, but an initial focus is China, where Disney's first theme park is set to open next year in Shanghai. Uniqlo's largest store world-wide is in Shanghai, and an entire floor is being revamped to feature the Disney items. 

"It allows [Disney] to project their brand as a fashion brand rather than primarily as a kids' brand," said Ben Cavender, a principal at Shanghai-based consultancy China Market Research. 

Research firm Euromonitor International says Uniqlo leads Western rivals such as Industria de Diseño Textil SA's Zara chain, Hennes & Mauritz AB's H&M and Gap Inc. in apparel and footwear market share in China, though it trails Danish retailer Bestseller A/S and sportswear companies Nike Inc. and Adidas AG.

More in the Market Watch.

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.

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How Uniqlo could have handled its steamy video - Tom Doctoroff

Tom Doctoroff

A video of two customers having sex in a changing room of a Beijing outlet of Uniqlo went viral last week. Uniqlo even had to deny this was a marketing trick. Advertising guru Tom Doctoroff says in the Wall Street Journal it could have handled the issue more relaxed, in line with its own branding,

The Wall Street Journal:

The retailer, owned by Fast Retailing Co., sells mix-and-match clothing — so why not respond with a playful, yet serious line that connects consumers to the brand? That’s the advice of Tom Doctoroff, Asia Chief Executive of JWT, who offered one possible slogan: “Make your own style, but don’t take it too far.” 

In response to the viral sex video that was shot in a dressing room of one of its Beijing stores, Uniqlo said in a statement that it reminded “all customers to abide by society’s moral standards.” A spokeswoman for the company declined to respond to questions about the tone of the company’s response but said it was not involved in the video and that it has turned the matter over to the police for investigation. 

While Uniqlo didn’t opt for comic relief, other companies and consumers did. China-based car company Chery Automobile Co. posted on its social media sites last week a message that said, “Don’t try another room, try a car.” 

Venucia, Nissan Dongfeng’s low-price brand for China, sent this message over social media: “The car is equipped with power seats. Why go to Uniqlo?”... 

Of course, there is a serious side to the video. Making, publishing or spreading pornographic or obscene material is illegal in China and is considered a criminal act. And sex videos–no matter how much traction and attention they get online–don’t exactly match with this retailer’s brand message, said Mr. Doctoroff.

More in the Wall Street Journal.

Tom Doctoroff 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.

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Chinese pick Chinese brands on Singles´Day - Shaun Rein

+Shaun Rein 

A major shift in consumers preferences in China is that from foreign brands to Chinese. Author Shaun Rein of The End of Copycat China: The Rise of Creativity, Innovation, and Individualism in Asia explains in CNBC how the top-5 brands at Singles´Day illustrates the growing China pride.

CNBC:

The top 5 brands, ranked by gross merchandise volume, were budget smartphone manufacturer Xiaomi, followed by telecommunications hardware and phone maker Huawei, consumer electronics and home appliances company Haier, furniture retailer Linshimuye and Japanese apparel retailer Uniqlo, an Alibaba spokesperson told CNBC via email on Wednesday. 

Top 5 ranking reflects "the growing pride Chinese consumers have in their homegrown brands", said Shaun Rein, founder and managing director of the China Market Research Group. "That's why they are buying brands like Xiaomi and Haier." 

"Uniqlo is one of the hottest brands in China now because they make clothing and [have a] marketing campaign that fit the aspirations of Chinese consumers unlike Louis Vuitton with their blond hair, blue eyed models," said Rein, who is also the author of 'The End of Copy Cat China: the Rise of Creativity, Innovation and Individualism in Asia.' Many Chinese consumers are unaware that the brand originates in Japan, he said. 

Alibaba on Wednesday revealed that the Singles' Day sale saw over 1.2 million large home appliances, 3 million lighting products, 200,000 bottles of laundry detergent and 50,000 new cars sold. 

"Those categories are very popular in China," said Rein. 

White goods makers tend to engage in aggressive marketing campaigns for Singles' Day, he said. Discounted laundry detergent, meanwhile, is a popular item as Chinese consumers prefer to have it delivered rather than carting it home. Finally, online car shopping is booming, he said, because consumers know what they are getting when they order one.

More at CNBC.

Shaun Rein 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.

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