Alliance Boots Acquires Minority Stake In Nanjing Pharmaceutical, Aims For Pole Position In Consolidation Of China's Retail Market

Alliance Boots acquired a minority stake in Nanjing Pharmaceutical, the fifth largest pharmaceutical wholesaler in terms of sales in China. Stefano Pessina, Alliance Boots executive chairman who led the sale of a stake in the retailer to United States-based pharmacy chain Walgreens, said China's retail market is poised for further consolidation. After selling 45 percent of Alliance Boots to Walgreen for about $6.5 billion, Pessina is looking forward to the second phase of the deal with the American retailer, which has the option to acquire the remaining 55 percent of the company for about $9.5 billion more in cash and shares and assumption of outstanding debt.

"Alliance Boots aims to be in the vanguard of China consolidation", Financial Times, May 06, 2013

Germany's Metro Plans To Open More Retail Stores In China In 2013

Germany-based retailer Metro Cash & Carry said it plans to open 12 stores in China in 2013, after an equally rapid expansion in the previous year. Believing that the recent economic slowdown in China is not part of the overall trend, Metro said it will focus on opening in more locations in the country. While Metro China, which reported a 23 percent growth in revenue to €1.89 billion in 2012, is expanding its operations, other major retailers have put on hold or scaled down their expansion plans because of slowdown in growth.

"The more the merrier for Metro", China Daily, May 03, 2013

Boost In Chinese Household Income Spurs “Trading Up” Trend

Growing buying power is giving Chinese consumers the desire – and the ability –  to buy goods and services that are a notch or two above the ordinary in terms of price and quality, Nielsen research finds. The average annual household income in China increased from $1,022 to $3,999 between 2000 and 2012 – a fourfold increase. At first this trading-up-to-premium trend was reflected in smaller purchases, like more expensive yogurt drinks. But it has grown to include all categories of FMCG (fast-moving consumer goods), “ from infant baby formula to liquid milk, from a bottle of skin moisturizer to a tube of toothpaste.” And sales of luxury cars have tripled since 2007.

"In China, Premium Sells: From Toothpaste to Cars to Banking", Nielsen Newswire, May 22, 2013

"Lipstick Effect" Comes To China As Economy Slows Down

China's economy grew at its slowest rate in 2012, and marketers and market analysts claimed the "lipstick effect" has come to the country. Lipstick effect happens when the economy slows down and consumers are more willing to spend on smaller and less expensive indulgences, such as lipstick, rather than on expensive luxury products. China's gross domestic product rose 7.8 percent in 2012, its slowest rate since 1999. In the first quarter of 2013, China's economy grew 7.7 percent. China's Purchasing Managers' Index dropped to 49.2 points in August 2012, a nine-month low. Although the industrial and manufacturing industries declined in 2012, fast-moving consumer goods and fashion brands made significant gains. China's beauty and personal care market's retail value grew from 184.1 billion yuan, or $30 billion, in 2011 to 202.1 billion yuan in 2012.

"'Lipstick effect' hits China as economy slows", China Daily, May 20, 2013

Emerging Markets To Become Among World's Top 5 Economies In 2020, Euromonitor Study Predicts

Emerging markets will dominate the world's top 5 largest economies in 2020, according to Euromonitor International. In terms of purchasing power parity, the three biggest economies in 2020 will account for about 30 percent of global GDP compared with 23.5 percent in 2012, with the most significant shift in global power expected in 2017 when China will overtake the U.S. to become the largest economy. While growth in emerging markets will mean better standards of living and decline in poverty, the trend will also have significant impact on the global consumer market. Euromonitor expects Brazil to join China as the only emerging markets on the world's list of top 5 consumer markets in 2020.

"Forecast: World’s Largest Economies in 2020", Euromonitor International, May 16, 2013

GLG Life Tech Partners With China National Cereals, Oils, And Foodstuff To Promote Stevia Products In China

GLG Life Tech Corp. entered into a strategic collaboration deal with China National Cereals, Oils, and Foodstuff Corp. for the Chinese market. A number of months in the making, the collaboration will focus on developing products that will help promote health food and beverage products and improving the health and welfare of consumers in China. Also, the partners announced that their collaborative efforts will focus on healthier food and beverage products, technology, and investments. GLG said it expects the official letter of intent to be signed the coming weeks, detailing the areas of partnership. China is one of the countries with the largest populations of people with diabetes, with about 90 million diagnosed with the disease and approximately 200 million classified as obese.

"GLG Life Tech Corporation Announces Planned Collaboration With China National Cereals, Oils, and Foodstuff Corporation ("COFCO")", GLOBE NEWSWIRE , May 15, 2013

Wal-Mart Admits China Business Is Ongoing Struggle, Sees Long-Term Growth

Wal-Mart said it is still working to optimize its business model in China where the U.S. retailer has about 8 percent share of the retail market. China operations accounted for $10.6 billion of Wal-Mart's $469 billion revenue in 2012, an increase of 15 percent from the previous year, according to IBIS World Inc. Wal-Mart International president Doug McMillon said his company is seeking to gain better locations and layouts compatible with a supercenter format. Although Wal-Mart closed four stores in 2012 and plans to close three more in 2013, it has no plans of leaving the market like what its rivals Best Buy and Home Depot did. Instead, the retailer said it is investing $80 million to remodel 50 stores and build 30 new stores more. Also, Wal-Mart said it will invest $16.3 million to improve food safety measures in China.

"Wal-Mart still working to meet the China challenge", The City Wire Staff , May 14, 2013

Bird Flu And Unsafe Chicken Cause Yum! Brands' 29 Percent Sales Dive In April 2013

Yum! Brands Inc., owner of the KFC fastfood chain, reported that same-store sales in China dropped 29 percent in April 2013. Concerns about the safety of KFC's chicken and the spread of bird flu in China prompted customers to stay away from KFC restaurants. KFC's efforts to offer localized dishes is working against KFC's brand, which is driven by the taste of its friend chicken and which is what made Chinese consumers fell in love with the restaurant chain in the first place. Also, KFC is feeling the pressure from U.S.-based competitors McDonald's Corp. and Burger King Worldwide Inc., which are expanding their China operations. Reports about high levels of antibiotics contained by locally sourced chicken also harmed KFC's sales and profit, which Yum forecast to decline by mid-single digit rate in 2013. In contrast, net income increased 21 percent to $1.6 billion in 2012.

"Yum’s 29% Sales Collapse in China Goes Beyond Avian Flu", Bloomberg News, May 13, 2013

More Women In China Rise Up Corporate Ladder, Still Face Discrimination, Survey Shows

In China, 30 percent of women are occupying senior management positions within companies, according to a survey by Starcom MediaVest Group. Many women, however, are not fairly compensated for their contribution, with their salaries about two-thirds of the salaries of their male counterparts. Results of the survey also found that although many respondents view men as equals, almost 88 percent of women said marriage and having babies make them less equal and limit their career opportunities in the corporate world. Modernization has transformed marriage and motherhood from a vocation into an obligation that limits women's chances for personal fulfillment, according to Starcom MediaVest national research and insights director for Greater China Jeffrey Tan. This perhaps led more than 90 percent of women to agree that marrying the right man, defined as a man with large enough bank balance, is important.

"Career mistresses, and the truth about women holding up half the sky in China", Campaign Asia, April 30, 2013

Chinese Women's Income, Household Authority On The Rise, Nielsen Study Shows

In China, women's contribution to family income has increased from 20 percent in 1980 to 50 percent in 2013, according to market research firm Nielsen. China accounts for seven of the top 13 richest self-made women in the world, and 86 percent of mothers in the country believe the future holds new opportunities and financial stability for their daughters. These gains in income have greatly enhanced women's role in household decision making, including purchasing decisions. Marketers must recognize and adapt to this trend, including how they connect with Chinese women. Nielsen's research revealed 27 percent of women follow their favorite celebrities on social media everyday and 54 percent of women trust social media postings.

"Women: The CFO of the Chinese Household", Nielsen/Consumer 360, May 22, 2013

Chinese Consumers Are Changing Their Shopping Behavior, Study Shows

In China, the average number of shoppers' visits to large-format retail stores dropped 20 percent from 7.4 per month in 2008 to 6 visits per month in 2012, according to market research firm Nielsen. Average consumer spending, however, increased from 1,337 RMB in 2008 to 1,610 RMB in 2012. Growth in emerging retail channels, such as convenience stores, personal care stores, and online stores, has been mainly responsible for these changes in shopping behavior.

"China's Evolving Shopper Landscape", Nielsen/Consumer 360, May 22, 2013

Shifts In Chinese Demographics, Consumer Buying Patterns, Offer Opportunities For Marketers

It’s a whole new economic world In China. Chinese consumers are better educated, more affluent and living more stressful lives, according to Nielsen analysis. The average annual per capita income experienced a fourfold increase to nearly $4,000. Households are shrinking as well: the average Chinese household decreased 15 percent to three people. Today’s Chinese consumers are much more motivated by individualism. They want products that are new and exciting, and offer convenience for their busy lives. Sales of ready-to-drink milk teas, juices and coffee products are growing by double-digit rates. Sales of mixing powders of comparable drinks are either flat or in decline. And the demand for convenience is driving sales of mobile devices.

"Tapping Opportunity Among China’s Increasingly Sophisticated Consumers", Nielsen/Consumer 360, May 22, 2013

Marketers In China Need To Allocate Their Ad Spend More Efficiently

Nielsen research finds that marketers targeting China’s one billion consumers need to optimize advertising – the message itself, as well as the frequency and distribution – to reduce or eliminate wasted dollars. Ads for mass brands should be delivered more frequently than messaging for premium products. The optimal response point for mass brands is a frequency of eight times compared with two times for premium products. Another waste-related problem is shelf space. There are 23 percent fewer advertised brands available to consumers compared to unadvertised brands, but they account for 31 percent more dollars. Of the 600,000 Chinese products on the market, only 2 percent will line the shelves of a hypermarket.

"Supercharge Ad Efficiency and Retail Distribution in China", Nielsen/Consumer 360, May 22, 2013