China’s consumer confidence will rise again, but only in three to five years – Ben Cavender

 

Ben Cavender

Consumer confidence is at a low, says business analyst Ben Cavender. But the current crisis has offered Chinese brands to improve their international positioning, and they will rise as winners internationally when China’s job market is back in three to five years, he adds, in the Sydney Morning Herald.

The Sydney Morning Herald:

China grew 4.7 per cent in the second quarter of 2024, slower than the 5.1 per cent predicted by economists as nervous foreign investors pulled a record £12 billion out of the country over the same period, in blow to President Xi Jinping.Some fear the world’s factory is now in overdrive as shrinking profits force producers to ramp up output just to get enough cash to service their debts.

Prices across the economy were shrinking at the end of 2023 and have only just started rising again, climbing 0.5 per cent in July from a year ago. “I’m optimistic that in three to five years, the job market will recover and be thriving again,” she says.Ben Cavender, managing director at China Market Research Group says it is clear that Chinese consumers have been tightening their belts.“Consumer confidence is low right now, and if anything getting lower,” says Cavender, who is based in Pudong, near Shanghai.

“Chinese brands took advantage of Covid to become much better at brand positioning and marketing, and can be as competitive or more competitive than foreign brands now in a lot of categories,” says Cavender. The industry, which has fuelled the explosive credit growth in recent years, has enabled an easier flow of credit to small and medium enterprises.

International tensions are another worry. Donald Trump has already vowed to escalate its trade war with China if he returns to the White House next year, while Kamala Harris said this week that as president she would ensure “America, not China, wins the competition for the 21st century”. Fears about overcapacity are creating more trade tensions, with many countries including the UK worried about being flooded with cheap cars in order to meet net zero targets.

“But in terms of getting things done, they can never win against the Chinese. So they are basically deluding themselves. The issue is that they don’t want to accept that China is going to be the largest economy.”

More in the Sydney Morning Herald.

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Metaverse: expected to grow fast in China – Rupert Hoogewerf

 

Rupert Hoogewerf

The metaverse is poised to grow fast in the coming three years, says Rupert Hoogewerf, chairman and chief researcher of Hurun Report, who published a report about the industry, according to the state-owned China Daily. Technology giant Huawei tops the list with the greatest potential in the metaverse for the first time, followed by Alibaba, Baidu, China Telecom and China Mobile.

The China Daily:

China’s metaverse-related industry is expected to grow fast in the next three years, thanks to continuing maturity and the application of key technologies including 5G, artificial intelligence, blockchain, cloud computing and virtual reality, according to an industrial report.

“Whether it’s entertainment, social media, online education, telecommuting, or digital marketing, the metaverse can offer entirely new experiences and models in the years ahead,” said Rupert Hoogewerf, chairman and chief researcher of Hurun Report.

Hoogewerf made the remarks after the Hurun Research Institute released a ranking report of 200 Chinese companies with the greatest potential in the metaverse in 2024 in Nansha district of Guangzhou, the capital of Guangdong province, in late August.

“The metaverse is considered a strategic emerging industry and will accelerate the promotion of Nansha to become an innovation highland and emerging industry incubation highland in the Guangdong-Hong Kong-Macao Greater Bay Area,” said Hoogewerf.

The report refers to companies based in the Chinese mainland, Hong Kong, Macao and Taiwan. For the main list, companies considered have a value of $1 billion or more.

“There has been a clear trend of metaverse-related businesses in the past three years, especially in the fields of education, finance, tourism and healthcare,” said Hoogewerf.

Technology giant Huawei tops the list with the greatest potential in the metaverse for the first time, followed by Alibaba, Baidu, China Telecom and China Mobile.

More in the China Daily.

The full report you can read here.

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China’s EV industry is looking good, domestically and internationally – Arthur Kroeber

 

Arthur Kroeber

China’s electric car makers are doing pretty well, certainly domestically and – perhaps except the US – also internationally, says leading economist Arthur Kroeber, author of China’s Economy: What Everyone Needs to Know. Excess capacity seems mainly a problem for traditional car makers, as demand for EV vehicles is only picking up. Internationally EV makers might face some restrictions, but they seem able to manage those, Kroeber adds in a debate organised by the Asia Society.

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A legal battle emerges about Mao’s reformist secretary diaries – Ian Johnson

 

Ian Johnson

A unique set of meticulous diaries, written by communist party member and reformist Li Rui, the secretary of Mao Zedong, have emerged in legal battles. Stanford University obtained them from Li’s daughter, but China is eager to get them back. Historian Ian Johnson, author of Sparks: China’s Underground Historians and their Battle for the Future, comments on the diaries and fears they will disappear into the black hole Beijing’s archives are nowadays, he tells ABC News.

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Time to buy in on Pinduoduo – Shaun Rein

 

Shaun Rein

Pinduoduo (PDD) suffered an unprecedented 30% decline in its share value at the start of this week, but business analyst Shaun Rein sees here an opportunity for investors. Buy PDD, he tells them on CNBC. The company has hit a wall through China’s consumer decline in trust, but he sees enough possibilities to grow overseas, especially with Temu, he adds.

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Slashing prices hits China’s eateries – Ashley Dudarenok

 

Ashley Dudarenok

China’s eateries have been slashing their prices up to half to woo consumers, but marketing expert Ashley Dudarenok warns that this trend might hurt the businesses, as their costs do not go down, she tells Channel News Asia. Business models and their effects do vary a lot, depending on the age group the industry is focusing on, she adds.

Channel News Asia:

The current trend of affordability is not a passing phase, and is a response to significant shifts in the market, said Ms Ashley Dudarenok, founder of China-focused digital consultancy ChoZan.

At the same time, she noted that consumer preferences in the Chinese F&B market vary significantly depending on the individual and the age group…

In the first quarter of 2024, around 460,000 restaurants were deregistered or had their licences revoked, with around a 230 per cent year-on-year increase in restaurant closures. In March alone, 180,000 establishments shut their doors.

China’s high-end catering sector has been hit the hardest since 2023, noted Ms Dudarenok. She cited the decrease in business banquets, declining foot traffic in shopping malls and reduced discretionary spending as reasons.

Long-term leases are compounding pressures, she added.

“It is difficult to achieve cost reductions from the decrease in commercial real estate rent in the short term. With these pressures, in 2024, news of well-known restaurants closing down became frequent.”

High-end dining casualties this year include several known Western restaurants such as Refer in Beijing and TIAGO. The former closed its doors for good on New Year’s Day, while the latter closed suddenly in April, leaving customers unable to redeem their prepaid balances and some employees with unpaid wages.

Located in Beijing, Michelin-starred Italian restaurant Opera Bombana abruptly shut down in April as well. It was later revealed that the restaurant had defaulted on rent.

Still, China’s F&B industry remained resilient overall, official data suggests. National revenue reached 460.9 billion yuan in June, a 5.4 per cent year-on-year increase. From January to June, the sector generated a total of 2.62 trillion yuan, a 7.9 per cent year-on-year rise.

New endeavours have also been sprouting up. Among the nearly 15.73 million catering enterprises nationwide, more than 4.1 million were newly registered in 2023, with private firms accounting for over 80 per cent, industry data shows.

“New entrants face higher barriers, needing to excel in product, pricing, supply chain and management to succeed. This has led to an accelerated ‘survival of the fittest’ landscape, where strong companies strengthen their positions while weaker ones struggle,” said Ms Dudarenok.

For instance, Shanghai-based fast food retailer Yum China – which operates brands like KFC and Pizza Hut in China – posted record-high Q2 revenue at US$2.68 billion, up by 1 per cent year-on-year, despite “challenging industry dynamics”…

Existing F&B players are finding ways to adapt, noted Ms Dudarenok – such as opening up to franchising, or expanding abroad in the hopes of breaking into new markets.

While there are clear benefits, these come with significant challenges as well, Ms Dudarenok pointed out.

“(Franchising) allows for faster expansion with less financial pressure compared to direct operation. However, it demands higher standards in supply chain management and franchisee oversight,” she said.

Meanwhile, expanding overseas requires adapting to different culinary cultures and preferences, and involves extensive market research and localised product adjustments.

Mr Zipser from McKinsey said exploring new revenue streams and incorporating local flavours in their offerings are among the innovations which can help chains stay competitive, coupled with a strong social media presence.

Ms Dudarenok highlighted the growing domestic consumer appetite for creative dining experiences. She cited examples in cities such as Luoyang, which introduced immersive dining events in the summer such as a beer festival and the “Luohun Whole Fish Feast” cooking competition…

Existing F&B players are finding ways to adapt, noted Ms Dudarenok – such as opening up to franchising, or expanding abroad in the hopes of breaking into new markets.

While there are clear benefits, these come with significant challenges as well, Ms Dudarenok pointed out.

“(Franchising) allows for faster expansion with less financial pressure compared to direct operation. However, it demands higher standards in supply chain management and franchisee oversight,” she said.

Meanwhile, expanding overseas requires adapting to different culinary cultures and preferences, and involves extensive market research and localised product adjustments.

More at Channel News Asia.

Ashley Dudarenok 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.

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Why China’s women abandon marriage – Zhang Lijia

 

Zhang Lijia

China’s government is trying to encourage giving birth to children and marriage to offset a fast-aging population. But author Zhang Lijia discovered on a tour in the country China’s women abandon the idea of getting married, she writes in the South China Morning Post. “I believe this trend is driven by educated urban women. It is in line with the trajectories of more developed countries. Once women have a good education and good jobs, they become less keen on marriage,” she writes.

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Zhang Lijia:

Fewer people are getting married. For nine years after the 2013 peak, China’s marriage rate declined every year, from 2014 to 2022. It rose last year but the general trend, I am afraid, remains downward.

I believe this trend is driven by educated urban women. It is in line with the trajectories of more developed countries. Once women have a good education and good jobs, they become less keen on marriage.

I understand the practical reasons behind the hesitation to get married in China – financial insecurity, high living costs and expectations such as of the prospective husband providing the marital home – but what matters more is the changing attitude. Plenty of assertive young women no longer see marriage as a necessary rite of passage or ingredient of happiness. Unlike my grandma, young women today have a lot more agency.

And they care more about the quality of marriage. Unlike my mother, such women do not hesitate to leave unhappy marriages. Indeed, more divorces are filed by women.

In most cities, divorce has become more socially accepted, although some among the older generation still think it’s shameful. More than 18 years ago, when I broke the news to my mother that I was getting a divorce, she was heartbroken. Once again, she started to nag me about looking for a man. “A woman is nothing without a man,” she asserted.

I was a divorcee, but I was also a published author with books around the world, had lectured at top universities such as Harvard and been interviewed by the BBC. Was I still a nobody simply because I didn’t have a husband? I swallowed these words, knowing there was no point arguing with her. Until her passing five years ago, my mother kept my single status a “secret”.

What is helping more women reject marriage is the more liberal attitude towards sex. In cities these days, sex before marriage has become common practice.

Also in Shanghai, I interviewed a successful businesswoman, a single mother. Some eight years ago, when she found herself pregnant from a fling, she decided to keep the child because she figured her child would be more likely to love her than a husband. She has never regretted this decision.

Since my youth, China has come a long way, not just in its economic development but also in its enlightened social attitudes. After all, women have the right to make choices that reflect their desires.

Do I still want to get married? Not particularly – unless I meet someone I am madly in love with.

More in the South China Morning Post.

Why it is important to avoid historical amnesia – Ian Johnson

 

Ian Johnson

Independent Australia reviews Ian Johnson‘s latest book Sparks: China’s Underground Historians and their Battle for the Future and supports his effort to avoid pressure from the government to forget the past. “Johnson gives us access to some of the recent events that have already been obliterated from Communist China’s official history, from the murderous disasters of Mao’s crackdowns on critical thinking to the cult rise of Xi Jinping.”

Independent Australia:

What China’s Mao took from Stalin’s Russia was what Pulitzer-prize-winning writer Ian Johnson, in his must-read new book, Sparks: China’s Underground Historians and Their Battle for the Future, calls the imposition of cultural amnesia. Nasty and divisive as a so-called history war might be here, in China, it’s deadly.

Johnson gives us access to some of the recent events that have already been obliterated from Communist China’s official history, from the murderous disasters of Mao’s crackdowns on critical thinking to the cult rise of Xi Jinping.

In the display halls devoted to Xi’s rule in Beijing’s National Museum of China, along with videos of him delivering speeches and copies of his many books, preserved in a glass case, there’s even a receipt from a modest restaurant meal eaten by the great leader. Not even the Elvis museum has that kind of object-reverence.

It was in that museum that Xi announced his Chinese Dream policy, effectively rewriting the Communist Party history to ensure no criticism of what actually happened (including the 1989 Tiananmen Square massacre) would trouble his plans to lead China back to (mythic) glory. Make China Great Again.

To read about Xi Jinping’s attitude towards history is like reading Blainey on steroids, pumped up and enormously dangerous.

Two years before he took over as Party President in 2012, Xi gave a keynote at a national meeting of historians — who were, in fact, functionaries tasked with (re)writing the official history to make sure it conformed to Xi’s idea of patriotism.

Johnson writes:

‘He laid out a five-point program that called for publicising the party’s history, including its “great victories and brilliant achievements”, and the “historical inevitability” of its rise to power. Especially young people, Xi said, had to be made to appreciate the party’s grand traditions and the heroism of its leaders, and must “resolutely oppose any wrong tendency to distort and vilify the party’s history”.’

Ah, yes. Young people must be “made to appreciate” their leaders’ heroism. And “wrong tendencies” must be stamped out. Including the tendency to demonstrate and wave banners that criticise those in power.

In the China described by Ian Johnson, standing between the brute strength of Xi’s government and the continuing trauma of repression are the “underground historians”, those who find ways to gather evidence, record testimony and disseminate information. The second half of his book and his conclusion express hope that the new technologies for communication are making it possible for these underground historians to connect with others and archive history.

Having worked for most of his life in China as a correspondent for influential American news outlets, Johnson is himself part of the networks he now considers crucial to the counter-history that challenges the official amnesia imposed by the Government.

Talking about the United States, Johnson points out that the lack of interest in China, the fact that fewer and fewer study the language, could be countered by bringing:

‘…inspiring people to come for residencies, to mentor, and to lecture – rather than as refugees when they are at the end of their rope – (which) would expose our societies to the living traditions of Chinese civilisation.’

That’s why the denigration of history that is critically engaged with the past is so dangerous; it cancels the curiosity, intelligence and commitment of those who write to help us understand history, calling it negativity, or, as Xi does, “nihilistic”.

More in Independent Australia.

Ian Johnson 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 China’s consumers became depressed – Ashley Dudarenok

 

Ashley Dudarenok

Reuters reviews China’s latest blockbuster “Upstream”, casting a rare and harsh light on the country’s biggest economic pain points. “An uncertain job market, downward mobility, and the hardscrabble life of millions who are working gig jobs.” Marketing expert Ashley Dudarenok sees a profound change among the previously optimistic consumers, who pushed ahead the country’s economy in the past, she tells Reuters.

Reuters:

Ashley Dudarenok has written books on Chinese business and consumer trends.

“It is a rather realistic depiction of the psyche of many Chinese people today. Previously, if we remember five years ago, 10 years ago, what set China very strongly apart was this very positive mindset of the consumer of an average business person. Because there was this strong underlying belief that tomorrow is going to be better than today, the economy is going to be better, opportunities are going to be better, technology is going to, you know, drive us forward. ‘I’m going to build my skills and my future is going to be better.’ Today that belief is not there.”

More at Reuters.

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Exploring 40 years of innovation in China’s marketing – Ashley Dudarenok

 

Ashley Dudarenok

Marketing expert Ashley Dudarenok dives into 40 years of marketing innovation that has put China in a leading role right now. A showreel giving an overview of Ashley’s amazing career and deep involvement with leading companies, both foreign and domestic, in China.

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Is China a democracy or a dictatorship? – Ian Johnson

 

Ian Johnson

Why is China calling itself a democracy when it is not according to most definitions? China scholar Ian Johnson, a fellow at the Wissenschaftskolleg zu Berlin, discusses this and other political issues at the Council on Foreign Relations. In the same way, it is not a dictatorship where Xi Jinping can decide on all issues in the country, he says.

Ian Johnson 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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Why China’s business climate is under pressure – Shaun Rein

 

Shaun Rein

China’s economic situation has deteriorated over the past two months, says business analyst Shaun Rein in a discussion on CNBC. The hope for a financial bazooka to boost the economy by the government has not materialized and is unlikely to do so. The government seems fine with the current 4/5% growth and also lacks the money to spend as tax income has remained poor, while geopolitical challenges forces the Chinese government to be prudent too.

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How AI is changing retail – Sharon Gai

 

Sharon Gai

Former Alibaba executive Sharon Gai explains how AI is changing the retail industry beyond recognition. Amazon was the pioneer in this field, although now nobody can ignore the change AI is causing globally.

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China: neither collapsing nor booming – Howard French

 

Howard French

Former Shanghai-based foreign correspondent Howard French recently returned to Shanghai for the first time after corona and takes stock of its current state, by talking to Chinese and foreign residents in the city. In Foreign Policy he reports about these findings. French: “All I can say with certainty is that we are all in for a turbulent, costly, and possibly dangerous ride.”

Howard French:

In the final of these conversations, I asked a much older Chinese scholar about the mounting tech war between the two countries, in which the United States has been seeking to limit China’s access to the most sophisticated microprocessor manufacturing equipment, advanced graphics chips from companies such as Nvidia, and artificial intelligence technologies.

The scholar said the West badly misunderstands China, underestimating its preoccupation with its standing in the world. This will only push Beijing to strive harder to build these technologies on its own—and ultimately prevail. He clarified that he was not predicting that China would win across the board. The point he left me with was that any perceived antagonism from the West will feed Beijing’s preexistent desire to lead in every field that it thinks matters.

This, he said, will lead China to double down on industrial policies and state-driven investments. Many of these will prove misguided or inefficient in the long run. But in a country of China’s size, with enormous resources not only in national wealth but in human talent, many will also succeed, giving its Western competitors all they can handle over the next few decades. All I can say with certainty is that we are all in for a turbulent, costly, and possibly dangerous ride.

More in Foreign Policy.

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