China

The more you understand China the less you know… The enigma that is China is changing rapidly. David’s 19 years of China experience puts some of China’s developments into context.

8 Retail Trends In China – No 4. Local Retailers Become Masters Of Their Own Universe

Local Retailers

You can safely assume that local retailers will continue on their path of extraordinary evolution to becoming world class. Undoubtedly, they will become more sophisticated in their deployment of systems, stricter in their management and begin to deliver better value than the international retailers currently fighting for market share inside China. Local retailers, either national or region-specific, are already starting to outstrip their international counterparts and in the Year of the Horse you can expect this to accelerate, with geographic expansion and increased output through existing sites. Local retailers already have the ability, through multiple means, to extract more profit from their locations, with the added advantage of ‘neighbourhood’ knowledge and connectivity. As they absorb elements of global retailing best practice, we forecast an ever-improving performance.

8 Retail Trends In China – No 3. A Bank In The Hand

Digital Banking

As e-commerce continues to develop fast, so too will the ability of Chinese consumers to bank via mobile platforms. we’re already seeing this happening in multiple ways, from street vendors processing credit cards via their android tablets, to e-commerce companies like Alibaba offering their consumers small savings accounts, to phone-to-phone SMS transfers. Tencent (China’s largest internet portal) has started offering customers a banking platform and with its 400million+ users, it’s destined to have a big impact. In the Year of the Horse we’ll witness consumers being able to use, share and spend money faster and more easily, leading to more transactions in more locations. This is good news for small businesses that have previously been constrained by payment issues, and might well regenerate the steadily shrinking small, informal trader. Just imagine how the ability to transfer a relatively small sum of money with a simple cellphone connection will enable transactions that were simply impossible in smaller rural areas. We expect to see points of purchase springing up virtually anywhere – not just in markets, but even on the most remote street corner. Such is the growing power of digital and peer-to-peer banking.

8 Retail Trends In China – No 2. Convenience Pulls A Punch

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Relatively low numbers of car owners by population, combined with city congestion, has meant Chinese shoppers have always valued convenience retailing. So far this has not represented a competitive threat for large format retailers but in the Year of the Horse we expect this to change. Convenience retailers’ growing understanding of the power they have to compete as a true retailer – rather than just an ‘impulse location’ – will exert more pressure on ‘traditional’ retail. Their vast distribution network is already in place and as they tweak their product offering to increase the value of basket sizes, we predict strong growth. Around the world, we’ve witnessed this retail approach lead the consumer away from larger formats and we fully anticipate it will now do the same in China. Look out for competitors vying to buy the well-established traditional branded convenience stores as international retailers realise that these small outlets are real strongholds. Winning will come at a price however, as critical mass and distribution affordability will ultimately be the determining factors for business success. These will take time to set up, and whether already entrenched convenience brands will be able to leverage their head start remains to be seen. Regardless of who and how this slice of the retailing pie expands, we’re confident that it will prove to be a very robust format in years to come

8 Retail Trends In China – What’s In Store For The Year Of The Horse

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As China rebalances there will be significant changes and challenges which bring with them tremendous opportunities. Retail is always fast moving, dynamic and change is a constant. The two together, retail in China, represent a potent recipe for success as long as you can orchestrate it. So, as we are now in a new Chinese year – the Year of the Horse, I  have put together, with Mike Smollan, from  Smollan the 8 key retail trends you should be watching out for and creating strategies and activities around. Will be posting each one over the next few days…Here is the first one.

The Irresistible Rise Of E-Commerce

e-commerce will continue to engulf many areas of retail worldwide, but it’s in China that we fully expect to see the biggest surge. So much that by the end of the Year of the Horse China will become the biggest e-commerce market in the universe. Rising digital penetration amongst the Chinese and the development of digital banking (see ‘bank in the hand’ below), is set to sharpen both the appetite and ability to purchase anything and everything online. Businesses like Taobao (consumer-to-consumer online retail) and Tmall (b2c online retail) are already leading the charge – and indeed Taobao’s creation of a safe and cheap option for everyone to be buyers and sellers in a digital market place looks set to cement e-commerce in Chinese daily life. It’s inevitable that as other enterprises realise that online can provide a greater return on investment, they will start to put more effort and resources into it. We foresee more and more businesses beginning to use the digital platform to stimulate their flat traditional retail sales, further fueling the digital retail revolution. Undoubtedly a key enabler of this continued growth will be China’s low cost, dynamic supply chain; products can be delivered swiftly with little or no extra cost to consumers and this, coupled with the decreasing amount of time available to visit stores physically, will help make online shopping a nationwide norm.

The History Of Retail In 100 Objects – The Market

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It’s Tuesday so it’s The History Of Retail In 100 Objects  post – This weeks object is The Market

The principle of the market is as old as civilization itself. Markets and market places are still to be found everywhere and each country has its own tradition s and customs. In China, every neighbourhood has its own little vegetable and meat market, selling local produce. These Chinese markets are a focus of activity and noise, and modern Chinese supermarkets still reflect the look and feel of these original markets with stores housing ‘mini’ markets and stalls within them. In Moscow, 21% of all retail trade takes place in markets and indeed markets continue to occupy a special place in the hearts and minds of Russian shoppers. About half of all clothes and shoes sold in Russia are brought at markets – the prices are cheaper and sometimes the goods are newer and more plentiful than in retail outlets. Although perishable goods are also offered, grocery retailing has expanded significantly to the extent that now only about 11% of all food is sold at markets. For centuries, across every part of India, weekly Haats or ‘gatherings’ would see vendors gathering in market places. As towns and cities grew, small retail stores began stocking more goods, and high street bazaars were formed where traders sold a range of goods, food, and perishables. In 1869, the Mumbai Crawford Market could be said to be the first form of shopping centre in India, then in 1874, the Hogg Market was built in Calcutta. Now known as the New Market, it was designed by an East Indian Railways Architect, R.R. Banya, and named after the municipal commissioner of Calcutta, Sir Stuart Hogg. The Hogg Market had a garden, a red brick Gothic clock tower and benches for shoppers to rest upon. Just a decade ago the majority of Indian shoppers still relied on street markets. But shopping traditions here are changing too. The street markets are still appreciated for their colourful displays and merchandise, but new shopping malls offering entertainment and experiences for all the family are also attracting many customers through their doors. Retailing is now the largest private industry in India and the second largest employer after agriculture.

Contribution to Retail History

Markets have existed throughout human history. Often centrally located or in an area of optimum footfall – at a port or roadside – wherever buyers and sellers could get together a market could be created. The focus of economic activity for the surrounding area, markets were also and remain today, a focus for social events, customs and traditions.

The History Of Retail In 100 Objects Is Available As A Free Podcast

History of Retail

Get Ready For More Of This

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It was not that long ago that, when it came to technology, Korea was viewed as a slow follower and not an innovator.  This has changed and Samsung has been leading the charge. Today Samsung is on the cutting edge in many aspects of technological innovation, style and consumer electronics “fashion”. Giving others a run for their money, including Apple. It is also helping Brand Korea to change its image from slow follower to an innovation engine.

China at the moment is very much seen as the manufacturing engine of the world. Taking others innovations and mass-producing them at scale to make them affordable, and they are good at it, indeed they are world class.

But we are going to see changes here that will follow the Korean example.

Enter Haier, one of China’s leading domestic appliance (and a lot more) manufacturers. Chinese Haier became the first appliance company to be accepted into Apple’s MFi licencing program. The Apple MFi program grants certification to create AirPlay products that connect to iPod, iPhone, and iPad.

With Haier it’s not just acceptance it is product as well. At the massive Consumer Electronic Show (CES) in Las Vegas earlier in the month the Haier’s Tianzun air conditioning units were launched and on display. They are the first appliances to be accredited and they carry the MFi branding and functionality built in.

MFi makes things simple, easy and efficient to connect and control.- bringing the connected home and the Internet Of Things to reality.

There will be more Haier home appliances that will follow. Expect to see it MFi in Haier’s water heaters, ovens and a lot more.

It’s one small step, Chinese companies being the first to implement new technologies and not lagging behind. As China rebalances prepare to see more…

China As Clear As Smog

Fast development has its down sides. Pollution is an unintended consequence. The smog levels in Shanghai reached disturbing levels in December. Take a look here at  the recent smog in Shanghai and the issues that it makes you think about.

http://youtu.be/zwslG9jAy1o

 

Happy New Year

Happy New Year

Happy New Year –   Shanghai China

Wishing you all a very Happy and Healthy New Year.

David

Countdown to Top 50 Most Valuable Chinese Brands 2013

I have had a lot of requests to see again the video created which countdowns the BrandZ Top 50 Most Valuable Chinese Brands 2013 that I played at the China-Britain Business Council Conference. So here it is. Photographs by the very talented Cecilie Ostergren. There is much to learn from each of the BrandZ Top 50 Most Valuable Chinese Brands which I will explore in future posts. So for the moment,  enjoy the countdown.