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By SMG Research Team, June 15, 2010 7:05 pm

To continue last week’s post about e-shopping (because this is a pretty hot topic and it’s not going away any time soon!), find out which city shops the most online, and which country is hoping to grab a piece of China’s e-shopping pie.

Online Shopping Boom

According to the China Internet Network Information Center (CNNIC), one out of four Chinese netizens shop online.  In 2009, China’s online trade reached 248 billion yuan ($36.4 billion USD), up 94% from 2008.  This number is expected to reach 1 trillion yuan by 2013.

From this ---> to This!

Shanghai #1 in e-Shopping

Shanghai residents took the top prize in spending the most time online AND also spending the most money there – nearly at the level of developed countries.    Taobao recently released an online shopping report that compared the internet spending of people in Shanghai, Beijing, Shenzhen, Hangzhou, Guangzhou, Nanjing, Suzhou, Tianjin, Wenzhou and Ningbo.

Shanghai consumers cashed out with 17.42 billion yuan in online spending in 2009.  In 2^nd and 3^rd place were Beijing (RMB 11.25 billion) and Shenzhen (RMB 6.48 billion).

Annual spending (May'09-May'10) power of China's top 10 e-spending cities. Source: Taobao

According to the report, in all ten cities, 25 to 34 year old consumers were the driving force for online shopping, making up 62.5 percent of the sales.

Led by Taobao

Taobao boasts an 86% of China’s market share.  With a name meaning “hunting for treasure”, they actively aid the consumer’s hunt by incorporating tools that ease the shopping process.  Taobao instant messenger is an easy communication channel for buyers and sellers and a platform to foster trust and answer questions in real-time.

The company has also been serious about establishing itself as a credible enterprise and has spent 100 million yuan (15 million dollars) in an ad hoc campaign to proclaim its zero tolerance policy for fake goods, closing all online stores selling fake products.

Large retailers getting on board

The power, reach and influence of Taobao cannot be denied.  China’s biggest Xinhua Book Store has an outlet on Taobao and in April, Japan’s UNIQLO also opened a shop.  Even airline company, China Eastern, will soon set up an online ticket store on Taobao.

Taobao’s strategy for the next year is to facilitate the business to consumer platform, making it easier for companies to sell products online to an established (and growing!) consumer base.

Japan getting in on Chinese online shopping

The fervor and passion of China’s e-shoppers is not waning any time soon and others have picked up on this trend, including Japan’s biggest online shopping mall operator, Rakuten (sidenote: they’ve got a great tagline – “Shopping is Entertainment” and their 2009 revenues exceeded US$3.2 billion).  Partnering with Baidu, Rakuten will begin operations on China’s largest online mall in July.  This enables Baidu to start playing in the e-commerce space and focus on a B2C strategy.

Rakuten's English Landing Page

Online Shopping Addiction becoming a real concern in China

A group of e-shoppers have identified themselves as being members of the “internet shopping tribe”, also called wang gouzu (网购族), leading to online support groups for e-shopping addicts.  In one of these groups, an “addict” described the thrill of finding something online priced cheaper than retail and getting a ‘high’ when pressing the purchase button.  According to Sina.com, Chinese shoppers each spend an average of RMB 10,000 per year online.

What’s next?

With the sheer size of the Chinese population, their rapid adoption of the internet and the vast untapped market (China’s internet penetration rate was 28% as of January 2010), and the advancement of delivery routes into lower tiered cities, China’s e-shopping space is an area companies are not taking lightly.

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By SMG Research Team, April 20, 2010 3:19 pm

Following up on my article about China’s Ant Tribes (click here for a refresher), groups of Chinese youth have become so fed up by the rat race and broken dreams found in Beijing and Shanghai that they are leaving and settling for smaller towns, where they being are offered a cushy start.

While the top tier cities have lured youth with projections of lucrative paychecks, career opportunities and a fast paced lifestyle, many youth are quickly discovering that the reality is nothing like what they had imagined.

Earlier this year, I conducted an in-home interview with a 25-year-old in Shanghai who moved there from his tier 3 city hometown.  Living with his girlfriend in a single room containing only a double bed (that filled 90% of the room) and a computer, their possessions were meager.  Studying in Shanghai was his dream – his first step to becoming a successful graphic designer.  In order to pay rent (and to keep his computer up-to-date) he works at a restaurant every night, including weekends.  “It’s really hard and not what I thought it would be,” he told me, “but I am staying because I have hope that it will get better.”

Youth living & working in Shanghai. Copyright - Starcom 2010

A May 2010 United Nations report stated that from 1980 to 2010, China’s urban population had more than doubled, expanding from 19% of China’s total population to 47%… and growing.

But not everyone is willing to stay and many have given up their big city dreams, seeking their fortunes elsewhere.  One of those places is Ningbo, a port city in eastern Zhejiang province (and home to the handsome beggar!), which will give housing subsidies ranging from 500,000 to 1.5 million yuan to qualified professionals.  Other growing cities like Tianjin, Dalian and Qingdao also offer flexible residency permit policies, which enable access to health care, home purchasing and education.

One reason why young and educated graduates would even consider these cities is because many companies have also discovered their appeal.  For many companies, big cities equal higher operating costs and competition, whereas smaller cities with a developed infrastructure may be just the answer.  For example, Microsoft and Boeing have both set up outsourcing delivery centres in Wuxi, Jiangsu province (a tier 2 city).

Young Chinese professionals

What this means for marketers

With the growth (and expected continued growth) of lower city tier economies – due to the modernization of city infrastructure, their appeal to major companies, and their poaching of professionals and new grads – it is absolutely crucial for marketers to place considerable resources into researching and studying lower city tiers.  We must start looking beyond tier two and three cities and venture into tier four (e.g Quan Zhou 泉州) and even tier five cities (e.g. Shan Tou 汕头).

Also, an influx of sophisticated consumers into lower city tiers may require marketers to re-evaluate their consumer messaging and campaigns, and to consider the dynamics of dual messaging within a single market.

Lower city tiers are an exciting frontier for marketers for its large and untapped consumer base, rising incomes, and consumer aspirations.  Understanding this group – their thoughts and motivations – is the challenge.

Come visit Starcom China Blog again on Thursday, where I will continue our lower city tier discussion and dig deeper into what we have learned about these consumers!

Tier 3 little one and grandfather

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By SMG Research Team, April 15, 2010 8:52 pm

上海世博会的目标，就是给两类人群带来震撼

1. 世界其他地区的人群
2. 中国大陆人群

好吧，我知道，这两类人群加起来，就是全世界。很显然，中国近年来正在向全世界展示这个国家的实力和政治影响力。

然而，举办世博的另外一个目的，也是向中国人民展示国家的富强和逐渐改善的生活水平。

据估计，世博会期间将接待7000万游客，而其中的95%将会是中国本国游客。游客数量非常可观。

那么，我们先来迅速回顾一下北京奥运会对市民带来了那些影响。Starcom在2008年奥运会结束后，立刻进行了一项针对奥运会的调查。我们看到，奥运会的成功使得中国消费者（尤其是年轻人）对中国的看待更加积极，并且为国家感到自豪。

在一线城市18-24岁的年轻人中，有88%认为“作为中国人很自豪”，在二、三线城市比例则达到95%。在所有18岁以上的成年人中，有86%认为“中国与过去相比更强大了”

中国中小城市的居民采用一切可能的方式来观看奥运会

以上的数据清晰的显示奥运会对中国消费者在认识国家和民族自豪感方面起到的令人称奇的作用。我可以想象，上海世博会只会延续这种趋势。

届时，全国各地的游客会蜂拥而至，那些不能亲自前来参观世博会的人们会通过铺天盖地的新闻、报道、照片等来了解世博实况。世博会会令人们打开眼界——尤其是中小城市的人群——他们没有机会生活在北京、上海、广州这样的大都市——如果没有世博会，他们就没有机会了解到中国今日发展的速度。

既然中国这样希望展示自己的国力，那么中国游客到达上海的时候，会看到那些呢？

首先，世博园的规模巨大，是2008年西班牙萨拉戈萨世博园面积的20倍。

中国馆本身就是一个必看的景点。中国馆气势恢宏，高度达69米，主体采用中国传统中代表喜庆的红色，每天可接待5万名游客。中国馆的造价是2亿美元（相当于14亿人民币）——哇噢。

本届世博会的主体是“城市，让生活更美好”，这也是中国在清晰的向人们传递这个国家会走向更加积极的未来的信息。上海将着眼于未来，着重向人们展示中国在商业、科技等方面持续的发展。

随着奥运会期间大量的信息传递和许多企业采用新的方式来吸引本地消费者，中国一跃而进入了一个新的传媒时代。我们期待着上海世博会对此的延续，并且为中国人民带来奇迹和自豪。

世博见！

P.S.说到我最喜欢的展馆，那就是贵州馆，融入了贵州特有的喀斯特地貌和中国最大的瀑布黄果树瀑布。贵州馆的主题就是“醉·美贵州避暑天堂”。

P.P.S. 点此了解世博最新进展 ;)

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By SMG Research Team, April 13, 2010 7:41 pm

I need to write about how excited I am about the Shanghai World Expo!  It is expected to be the largest World Expo in history.

May 1st is the opening day and as it draws near, countries are racing against one another to build the most exotic, crowd-pleasing pavilions.  The theme of the 2010 Expo is “Better City, Better Life” and each country will be showing off their architectural, design and sustainability excellence.

Just a few numbers:
-          200 national and corporate participants
-          More than 20,000 performances
-          800,000 visitors a day anticipated
-          70 million visitors in total

As evidenced by the Beijing Olympics, China hosts events of epic scale and there is no doubt that this Expo, which has cost more than the Beijing Olympics, will not disappoint.

Money has also been poured into Shanghai, giving it a facelift and upgrading its infrastructure and public transportation system.

With so many visitors flocking to the Expo, some companies have been forward-thinking enough to build their own pavilions.  One of the best examples of this is Coca-Cola.  Upon entering the Chinese market, Coca-Cola has faced many challenges, such as stimulating the taste buds of the traditionally hot-beverage and tea-drinking Chinese.  But their presence at this monumental event is sure to leave a lasting impression amongst local consumers.

A little Expo history: Did you know…

In1904, the World’s Fair in St. Louis in gave the world x-rays and ice cream cones.
In 1939, the New York World’s fair unveiled television broadcasts, the tape recorder and nylon stockings.

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More Shanghai Expo news to come on Thursday, including my favourite pavilions (so far).  In the meantime, here are a few pictures of some nearly completed national pavilions:

China Pavilion - up close

The 20-meter-high Seed Cathedral (part of the UK pavilion) will be covered by 60,000 slim, transparent acrylic rods, which will quiver in the breeze

Sunny Valley (a structure to harness solar energy) and the Chinese Pavilion lit up

"Joy Street", part of the Dutch Pavilion

Photos courtesy of REUTERS