China attracts entrepreneurs from all around the world. Why is that? First because of its massive population, which makes it today’s biggest market for many products, but also because everything moves so fast over there: companies are being innovative, consumers are very responsive and trends go viral and get adopted pretty fast. If you want to succeed in China, you need to be able to foresee the trends that will be hot in a few months, before your competitors do. Here is a list of the markets you should keep an eye on for 2016.
We already know e-commerce is thriving in China. In 2014, online retail sales reached nearly 430 billion dollars in China, for an activity almost all domestic (products manufactured in China or which were already shipped to China). Which astonishing amount could be reached if Chinese consumers had online access to products directly from other countries? We already know they are fond of foreign products and that they have a trust issue with Chinese products and e-commerce websites (counterfeits are a real problem) thus this could be a goldmine for foreign brands.
Well, this is already possible. Cross-border e-commerce websites are making it possible for Chinese citizens to order – and return – products from abroad. On the brand’s side, it is a real opportunity too: no need for them to be present in China while being able to reach the Chinese market. Besides, a tax exemption was expanded to cross-border e-commerce last year, making it even more appealing to foreign companies. We can already see the effects of all these factors: one in three Chinese cross-border shoppers purchased from 3 to 5 products from abroad and one in four international online purchases represent 1,000 to 3,000 RMB each. Sales on these websites are expected to escalate greatly.
Internet firms in the cinema business
The cinema industry in China has seen a jump of 48% of its sales from the first half of 2014 and the one in 2015, which represents 20 billion yuan. But it appears that most of the ticket sales were concentrated on the 500 best performing cinemas in the country, leaving 4,900 establishments with very little profit. In order to trigger a change, cinema business were rallied by Chinese internet companies.
A project of “smart movie theatre” in Beijing now enables consumers to book tickets directly from their smartphones, and present the latter as a ticket at the cinema; it also allows them to exchange tickets, which is a first in this sector. The company behind this project is own by Alibaba group. Baidu also stepped into the business and announced that internet products would be tested via movie theaters.
Cinema businesses are really trying to innovate and offer more services to moviegoers: they have observed that discounted sales do not lead to customer loyalty and they want to find new ways to be attractive again.
Mobile gaming market
Mobile gaming is increasing very fast in China. The expected revenue of mobile gaming in China should reach 5.5 billion dollars in 2015, against 3.3 billion dollars in 2014, which represents a 66% increase. The United States were the first market for mobile gaming until now but China should overtake the number one this year and score 100 million dollars more in revenue.
It is not so surprising that China now dominates the market. This was enabled by an important mobile penetration in the country, which itself is due to the affordability of such smartphone brands like Xiaomi. However these are not the only elements explaining how easily apps and games spread, and companies really need to put efforts in their strategies and operations to be successful. As for any other product, China is a challenge in terms of culture but also technological trends. A deep understanding of how thing works in the country is necessary and only trying to adapt a global success won’t have the same results on the Chinese market.
Chinese tourists are know to travel in big groups with guides and very strict schedules. The profile of Chinese travellers is completely changing, though. Indeed, more and more people go for trips which they have organised themselves. The Chinese International Travel Monitor (CITM) released a report pointing out that in 2014 there were 5% Chinese travellers more than in 2013 who chose to travel independently. Nowadays around two thirds of these travellers would rather travel on their own than go with a group. And numbers keep on growing.
Why is that? There are many reasons for this shift in consumer behaviour: the growing buying power of the Chinese middle class and the increasing knowledge about foreign cultures are the two most cited factors. Another element should not be overlooked: there are more and more direct flights to international destinations, especially from tier 2 and tier 3 cities in China. The latter provide with a whole new customer base for travel agencies, hoteliers and brands in these destinations.
Online to Offline
O2O, or Online to Offline, is the new buzzword for marketers in China. It represents any strategy which uses digital content to bring people to shop offline.
Why is China leading on Online to Offline interactions?
First of all, because China has so many people connected on their mobile. Then, one the most influential factor here, is the widespread use of one application: WeChat. Originally a messaging app, WeChat features all the functionalities you can think of, but the important one here is the QR code scanning function. While it has not gained a lot of popularity in Western countries, Chinese consumers are now really at ease with this scan process and they use it to add friends, follow celebrities… and get discounts.
Also, apps like WeChat and Alipay have enabled Chinese consumers to pay for literally everything from their phone: not only to make purchases on e-commerce websites but also to book taxis, pay for restaurant bills or to get a delivery for example. This mobile payment is nowadays one of the most preferred way of paying in China, and the services available to consumers will just keep on increasing, as companies and brands innovate on how to get netizens in their shops.
- China’s cross-border e-commerce boom for small retailers
- China is leading the O2O revolution
- O2O for fashion brands