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China Business Insight Alert Archive

Have a look at some of our recent alerts. These give broad coverage of the industry - if you want something more specific create your own here.

<<1234567>> Total issues:69

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February 01, 2018, to September 01, 2018

Alibaba Cloud Creates System For Raising Better Hogs

Alibaba Cloud has developed ET Agricultural Brain, an artificial intelligence-enabled platform for helping agricultural enterprises, including hog farmers, in China. Proprietary in design, the system is aimed at helping farmers to improve their livestock raising and crop production through innovations. With a special focus on hog farming, ET Agricultural Brain uses algorithm-based models to develop an “exercise regimen” for pigs to improve their health, as well as their piglet yields. China is the world’s largest producer of pork, according to data from the USDA Foreign Agricultural Service. It also accounts for half of the world’s pork consumption, data from Singapore-based DBS showed.

China’s Beverage Industry Is Strong, Growing

New players in China’s beverage manufacturing industry, coupled with rising exports in alcohol, drink, and refined tea, contributed to rising revenue and profit, according to a China-based consulting firm. Profit rose 25.2 percent in the first five months of 2018 to $12.5 billion, while revenue rose 10.8 percent year-on-year to around $99.6 billion. The industry’s ongoing structural reform was a major contributor to success, according to the consultant. New players include fruit grower Pagoda, which has collaborated with Sichuan Chia Meei, a subsidiary of Taiwan fruit business firm Chia Meei. Pagoda’s non-fruit concentrate (NFC) juices, sold under the brand “Hou Guo Zi,” reaped 6.6 million within three days of launch. Another China fruit grower, Chu Cheng Company, is expected to launch NFC products by the end of the year. Dairy milk producers, including Yili and Mengniu, are doing well, though trailing NestlÄ— and Danone. Jia Duo Bao (JDB), known as China’s Coca-Cola, expects two-digit sales growth this year.

Meitu Opens Meivolution Festival Highlighting AI Technologies For Beauty Applications

Meitu Inc., developer of an online beauty ecosystem with 450 million users, launched its first Meivolution Festival in Shanghai, China. Combining the Chinese character Mei, which means beauty, with the English word evolution, the event marks the first time the company hosts an offline event. During the festival, Meitu users can join their communities and friends using photography, augmented reality, and image optimization technologies offered by the company. Also, during the event, Meitu will highlight technologies, including artificial intelligence for testing skin quality and providing make-up tips.

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December 01, 2017, to February 01, 2018

FMCG Spending Grows In China, Report Shows

Consumer spending on fast-moving consumer goods in China grew 5.5 percent during the 12-week period ending November 3, 2017, compared with the same period in the previous year, according to Kantar Worldpanel. Data from the market research firm revealed modern trade expanded 3.1 percent during the period, faster than the same period in the previous year. Also, smaller-store formats grew the fastest, with supermarket and convenience stores growing by 3.9 percent and 4.8 percent, respectively, data showed. Among China's largest retailers, Yonghui grew the fastest at 11 percent, while Sun Art group, owner of the RT-mart brand, grew 5.7 percent, reinforcing its market-leading status.

L'Oréal To Tap Into Strong Chinese Demand For Premium Cosmetics

Acknowledging a rise in demand for high-end cosmetics in China, L'Oréal’s luxury beauty and skincare brand Giorgio Armani Beauty plans to open an online store on the Alibaba Group’s Tmall platform this month, along with a separate store on Tmall's invite-only "Luxury Pavilion." The online stores will offer product browsing as well as interactive digital experiences such as scheduled in-person makeup sessions with beauty advisers.

Asahi Sale Of Stake In Tsingtao: Not A Good Deal For Investors

The Financial Times says investors in Chinese brewery Tsingtao and Japan’s Asahi will be disappointed that Asahi sold its near 20 percent stake in Tsingtao at a third below its closing price on December 21 to Chinese investment group Fosun. Investors had been monitoring the possible sale of Asahi’s stake, and were excited when Carlsberg had indicated interest. Carlsberg would probably have paid more for the stake because of the possible synergies, and would have created China’s second largest brewer with a quarter of the market. Fosun, on the other hand, is not likely to improve Tsingtao’s fortunes, and should have paid more for the stock.

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November 01, 2017, to December 01, 2017

China Has A Serious Thirst For Imported Premium Bottled Waters

China’s newly-affluent, health-conscious urban consumers are driving sales of premium mineral waters. Packaged water sales in China grew 14 percent in the first half of 2017, a much higher rate than the two percent posted by the whole range of FMCG offerings. The top five local bottled water brands continue to dominate the mass market, claiming a 70 percent market share. But imported brands, including Nestlé’s Perrier and San Pellegrino, control the upscale segment. In fact, Nestlé “higher than expected” double-digit growth in sales of its premium sparkling mineral waters in China pushed the country ahead of Japan as Perrier’s largest market. Chinese brands are competing for a share of the upscale market with new packaging. Shenzhen Ganten and Nongfu Spring have both unveiled high-end glass bottling reminiscent of Perrier’s.

Chinese Beverage Industry Honors Pepsi-Tingyi Bottlers For Conservation Efforts

Bottlers and other production plants that are part of the PepsiCo-Tingyi alliance beverage system in China were recognized for water and energy conservation efforts at the 2017 China Beverage Industry Association (CBIA ) annual conference recently. PepsiCo and Tingyi won nearly 40 percent of the total awards at the conference, continuing a tradition of industry awards over many years. This year, 20 alliance plants won Excellent Water Saving Enterprise awards, and 26 received Outstanding Energy Conservation Enterprise awards.

Tingyi’s Profit Growth Is Strong, But Adverse Trends Are In The Wind

Tingyi (Cayman Islands) Holding Corp, owner of the Master Kong brand of snacks, noodles, and beverages, said its third-quarter profit rose 30 percent to $186.6 million on $2.97 billion in revenue from a restated $144 million in profit a year ago. A Chinese partner of Starbucks and PepsiCo, Tingyi warned of short-term margin pressure partly because of rising raw material costs. Other pressures affecting profit include China’s changing economic development mode, industrial upgrade, and fast-changing consumer demand.

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September 01, 2017, to November 01, 2017

China's FMCG Market Grows 4.6 Percent In August 2017 Quarter

In China, sales of fast-moving consumer goods grew 4.6 percent during the 12-week period ending August 11, 2017, compared with the same period of the previous year, according to Kantar Worldpanel. Data from the market research firm revealed lower-tier cities saw faster growth at 4.9 percent compared with 4.1 percent for leading cities and provincial capitals.

China's GDP Growth Expected To Slow Down In 2H 2017, Analysts Say

After growing 6.9 percent year-on-year in the first half of 2017, China's GDP is forecast to slow down in the second half, with growth for the whole year expected to reach 6.6 percent. In 2018-2019, the country's annual GDP is expected to drop to 6 percent, although consumption is forecast to rise by 7 percent. Based on IMF estimates, average productivity of the country's state-owned enterprises is 25 percent lower than those of their counterparts in the private sector. Productivity growth in the manufacturing sector slowed down from 2.6 percent in 1998-2007 to slightly over zero percent in 2008-2016.

Unilever Denies KJU Perfumed By Lux Shower Gels Named After North Korean Leader

Unilever has denied that the initials “KJU” from the brand KJU Perfumed by Lux of shower gels designed for the China market stand for Kim Jong Un, North Korea's leader. According to the company's head of personal care business, Alan Jope, the company realized there was an issue with the initials only after they had trademarked it.

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July 01, 2017, to September 01, 2017

Hangzhou Wahaha Group Buys Smart Beverage Vending Machines From DeepBlue

China’s largest beverage vendor is taking a step beyond FMCG toward automated retail with the signing of a 10-year contract with DeepBlue Technology to buy a million TakeGo smart vending machines. The machines use DeepBlue’s quiXmart payment system, as well as machine vision, biometric identification, and deep learning. The machines automatically assign items picked up by customers to a digital shopping cart. Customers are charged using Alipay when they exit.

Coke’s Summer Ads Feature Youth-Oriented Labels

Coca-Cola’s new summer “Share a Coke” ad campaign in China features bottles designed to attract the country's youth. Decorated with symbols and phrases used routinely by young people, the bottles are known as “code bottles.” Campaign unveils 37 distinct labels that show emoticons, numbers, characters and graphics. One code is the number 521, used by Chinese youth to say “I Love You.” Two films featuring the special bottles will be shown on social media platforms and TV. One stars celebrity Lu Han, who has 32 million social media followers.

Uni-President Plans To Enter Premium Instant Noodles In China

Taiwan-based food conglomerate Uni-President Enterprises Corp. president Alex Lo told financial reporters recently that the company hopes to carve out a niche selling high-priced instant noodles, including Expert of Soup and Man Han Feast, in China. The company already sells instant noodles and beverages in China through a Hong Kong subsidiary. Instant noodle sales account for 30 percent of the company’s total sales, while beverages account for 60 percent. Expert of Soup sells for about five yuan ($0.75) and Man Han Feast sells for 18 yuan. Low-priced instant noodles sell for about 2.5 yuan in the Chinese market.

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June 01, 2017, to July 01, 2017

When Flies Pig Out, China Reduces Its Food Waste Problem

China, with 1.4 billion of people, has a serious food waste problem. A farm in Sichuan province in the southwestern region of the country is working on it, however, using the larvae of black soldier flies – maggots – to devour mountains of leftover meat, vegetables and fruits. The larvae can eat twice their weight in food refuse. On average, one kilogram of maggots can eat two kilos of garbage in four hours. Not bad considering that each person in the country throws away almost 30 kilograms of food every year. And it’s a sustainable system: the farm processes the maggots into a high-protein animal feed and their feces into an organic fertilizer.

Fosun Should Find Better Takeover Target Than The Body Shop, Analyst Says

Chinese conglomerate Fosun International should discontinue its efforts to secure the rights to buy The Body Shop, the beauty retailer owned by L'Oreal SA. There are several reasons why Fosun would be better off looking for another company to acquire. These include the lack of positive forecasts for the retail sector, including the beauty retail segment. Also, The Body Shop's emphasis on all-natural beauty products no longer differentiates it from rival retailers, as reflected by the 4.8 percent drop in revenue in 2016. With a price tag of $900 million, which is expected to significantly jump once a likely bidding war starts, The Body Shop is quite expensive.

Hong Kong-Based Coke Franchisee Is Optimistic About Business With China

Coca-Cola franchisee Swire Pacific Chairman John Slosar says business with China has been very successful over the past two decades. The company will continue to invest there, while maintaining business ties with Hong Kong and Taiwan. Located in Hong Kong since the 1870s, Swire Pacific has prospered since the former British colony was returned to China in 1997 and began operating under the "one country, two systems" policy. Slosar is bullish on both Hong Kong and China, noting that Swire will expand its real estate, airline and beverage investments. "I'm sure the next 20 years will also have a lot of great opportunities for us," he said.

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April 01, 2017, to June 01, 2017

Watsons Kiosk In Shanghai Features YouCam Makeup App, Allows Customers To Virtually Try On Cosmetics

Retailer Watsons' flagship store in Shanghai features a kiosk that comes with augmented-reality-powered facial detection technology. Developed by Perfect Corporation, the YouCam makeup app allows customers to try on more than 30 products from leading makeup brands, such as MaxFactor, Maybelline, and Kate Cosmetics.

Researchers Find Strong Link Between Healthy Bones And Green Tea

A Chinese analysis of data from 15 studies found that green tea (Camellia sinensis) and a key compound known as EGCG (epigallocatechin gallate) tend to increase bone mineral density. However, the analysis of data from nearly 139,000 people stopped short of saying drinking green tea was linked to a reduced risk of fractures. The researchers suggest that the benefit of green tea regarding osteoporosis derives from its polyphenol content: as much as 40 percent of water-extractable polyphenols. Other teas contain much less. The researchers also suggest that green tea may act by boosting the creation of cells responsible for bone formation (osteoblasts) or suppressing cells that weaken bones (osteoclasts).

Chinese Restaurant Chain Sees Big Opportunity In U.S., U.K.

A spicy soup chain based in Beijing plans to open 80 new restaurants this year, at least 10 of which will be outside China. Sichuan HaiDiLao, which offers free massages and manicures to customers waiting for service, already has an outlet in Los Angeles. It hopes to acquaint American and British diners with its specialty hotpots featuring steaming broths flavored with meat, vegetables and noodles. The idea is to introduce the world to genuine Chinese cuisine in much the same way U.S. food companies spread American eating styles. Because of prohibitive labor and other costs in the U.S., however, duplicating the company’s successful business model won’t be a simple task. But, says company chairman Zhang Yong, “As the Chinese economy grows and the world starts to put more focus on China, I believe there’s a chance for Chinese restaurants.” 

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February 01, 2017, to April 01, 2017

Middle-Class Consumers Driving Growth In China's Beauty Market, Report Shows

China's middle class, composed of more than 100 million families, is driving growth in the country's beauty care market, according to Kantar Worldpanel. Data from the market research firm revealed middle-class consumers have more confidence about the future and, hence, are more likely to buy more and purchase big brands. They use the internet to find product information and are more ready to try new products and adopt new trends. Also, middle-class consumers accounted for more than half of the incremental sales in various categories of the beauty market.

More China Consumers Expected To Buy Foreign Goods By 2020, Study Reveals

By 2020, 25 percent of China’s population, or 325 million people, are expected to purchase products from abroad via online retailers, according to eMarketer. Data from the market research firm revealed more than 15 percent of the Chinese population bought $85.8 billion of foreign goods in 2016. With local consumers spending about $473 each on cross-border purchases in 2016, foreign products accounted for 4.2 percent of the total online retail market in the country.

Baby Care Market In China Gets More Sophisticated With Safe And Premium Products On Trend

China’s baby care market continues to grow strongly, often driven by parental attention on product safety and items with a premium-feel. Mintel says consumers are increasingly focused on specific safety claims and now seek out products that are hypoallergenic, dermatologically-tested and paraben-free. They are also more concerned about ethical/environmentally friendly claims. Mothers remain critical for marketers but there is growing recognition that fathers matter too. Mintel data shows that younger fathers are much more likely to be involved in childcare than older fathers. Some brands are play to this – Unilever’s Dove campaign, ‘See all the ways dads care’, is one example, as is Skinfood’s Goodfather range.

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January 01, 2017, to February 01, 2017

Premiumization Driving Sales In Many Categories Worldwide

A Nielsen report highlights the strength of the premiumization trend that is driving sales around the world and looks set to continue as powerful underlining shifts play out. Rising income and a desire for exceptional quality (cited by 54% as a factor in premium purchases) and superior performance (46%), are core drivers. Interestingly, Nielsen finds that products with social or environmental benefits have premium potential. Some 42% of global respondents say they’d be very willing to pay a premium for products made with organic or all-natural ingredients, while nearly the same proportion (39%) say they’d pay extra for sustainable or environmentally friendly products.
Premium is well established in many markets – it already accounts for about 25% of dollar sales in both the personal-care category in the U.S. and Southeast Asia and is growing faster than other segments.  In Southeast Asia, for example, the premium segment grew 21% from 2012 to 2014, over double the rate of the mainstream and value tiers (8% and 10%, respectively). Strong and growing levels of consumer acceptance indicate the segment will continue to expand. Nielsen states that over 25% of global respondents say they’ll consider buying premium personal-care product:  hair-care (27%), body-care (26%) and oral-care (26%).
More: we previously looked at prestige strategies in India.

Chinese Consumers Are Adapting Priorities As China Changes

In an interview, Delon Wang, Manager of Asia Pacific Trends at Mintel, warned that the rapid growth seen in China’s consumer goods industry might slow as economic growth decelerates and the population adapts priorities to the new China, focusing for example on buzzwords like ‘ancient’ and ‘old’. Mintel’s Global New Products Database indicates that product claims including the word "ancient” on packaging grew 56% in the first half of 2016 within China’s beauty and personal care and food and drink and categories. Wang said that consumers are demanding authenticity, and they are increasingly concerned about health and the environment. Value remains another key attribute for consumers. More consumers are also looking at opportunities to be entrepreneurs themselves in a bid to improve financial security during turbulent economic times, and many are choosing subscription purchasing for their fitness and beauty items. Brand loyalty is highest among the middle-class consumers (68% versus 50% for consumers overall). Other factors at work within China include technological advance – such as the Internet of Everything and smart devices – and retail innovation and evolution, such as pop-up stores.

TCM Gets A Bigger Role In Beauty

The Beauty industry is increasingly borrowing from Traditional Chinese Medicine. Amway is just one company expanding its use of TCM ingredients. Jia Chen, vice president of the Amway Botanical Research Center, says that TCM is a “life philosophy”, covering diet, nature and spirit. Amway is already using TCM ingredients in its Nutrilite products, but the Center is looking to expand the scope. In China, consumers are looking for more from their Beauty products, such as a link to their cultural heritage and the benefits of TCM, and TCM Beauty is becoming very popular among younger consumers in Asia.  

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December 01, 2016, to January 01, 2017

Imported FMCG Market Is Booming In China

China’s domestic Fast Moving Consumer Goods (FMCG) market has slowed from five years ago. Third quarter growth was a mere 3.6 percent higher than last year, while in 2011 third quarter growth was 15 percent, according to Kantar Worldpanel. Imported FMCG is a different story, however. Sales/consumption of imported goods in China grew 18 percent during the 12 months before June 2016, six times faster than market average. Growth was driven by imported milk, coffee (+32 percent), instant noodles (+29 percent), and snacks (+26 percent). In non-food categories, hair care, personal wash and cosmetics experienced strong sales growth.

Korean Beauty Brands Riding The Wave Of K-Pop Interest in China

A survey from FT Confidential Research on the Chinese cosmetics market found that South Korean brands were catching US and European labels, especially among young consumers, reflecting their interest in K-pop culture. L’Oréal is still the most popular brand, but the popularity of US and European brands generally is waning as Korean brands strengthen their hold. Popular Korean brands include Laneige and Amorepacific, and western brand companies are not ignoring this trend. LVMH has invested in Korean cosmetics company Clio, and last year Estée Lauder acquired a stake in Have & Be, which owns the DR Jart+ and Do The Right Things brands. Chinese cosmetics purchasers are particularly interested in BB and CC skin creams, but the cosmetics market generally is seeing strong growth in China, helped by the Government scrapping the 30 percent consumption tax on mass cosmetics products and halving it for premium items. E-commerce was the favored channel for younger shoppers, but the over-35s still prefer to buy in malls and supermarkets.

Ingredion To Distribute Sweetener Company’s Products Globally

Stevia-based sweetener maker SweeGen has named multi-industry ingredients provider Ingredion as its exclusive global distributor except in China, where distribution rights will be non-exclusive. Ingredion will begin distribution of California-based SweeGen’s products in February 2017 in the U.S., and will expand gradually internationally as regulatory approvals are secured. SweeGen's zero-calorie sweeteners are made by a proprietary process using pure stevia leaf extract. Illinois-based Ingredion says the sweeteners have a clean, sugar-like taste suitable for use in a variety of foods and beverages.
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