Things You Need To Know About China This Week

Macro Market

The National Bureau of Statistics announces November Data

The latest economic data for November 2023 has been released, revealing a faster recovery in industrial production. The added value of industrial enterprises above the designated size in the country increased by 6.6% year-on-year, marking a 2.0 percentage point acceleration compared to the previous month. Market sales have also shown gradual improvement, with total retail sales of consumer goods reaching 14,250.5 billion yuan in November, representing a 10.1% increase. When categorized by types of consumption, retail sales of commodities amounted to 3,692.5 billion yuan, reflecting an 8.0% growth. The revenue of the catering industry rose significantly to 558 billion yuan, a notable 25.8% increase. Moreover, online retail sales across the nation reached 13,957.1 billion yuan, up by 11.0% year on year, with online retail sales of physical goods specifically reaching 11,770.9 billion yuan, demonstrating an 8.3% rise.

E-Commerce/ Digital

Double 12 Campaign Ended Quietly

The last shopping carnival of 2023 has finally come to an end, with the year-end Good Price Festival on Taobao and the "Double 12"activities on other platforms officially coming to an end. This year, Taobao cancelled the Double 12, replaced by the "year-end good price festival", although the official revealed that Taobao's 10 billion subsidy transaction volume increased by 829% year-on-year, the average daily purchase users increased by 351% year-on-year, and orders from third tier cities increased significantly. But the whole consumer enthusiasm and platform promotion are not that strong.

After overtaking Meituan, NetEase became the fourth largest Internet company in China by market value

NetEase overtook Meituan on Dec 13 with a market capitalisation of HK $542.5 billion, while also overtaking JD.com and Baidu to become China's fourth-largest Internet company by market capitalisation. At the peak of its share price in 2021, Meituan's market value was about four times that of NetEase, but in less than three years, NetEase achieved a reverse of Meituan's market value. NetEase's relatively stable stock price is a major reason for its market value exceeding Meituan's. NetEase's third quarter report showed that its net income was 27.3 billion yuan, an increase of 11.6% year on year, and a number of new games performed well.

Brand Dynamics

The Estee Lauder Group invests in Chinese fragrance brand for the first time: meltseason

NewIncubationVentures (NIV), the early-stage investment and incubation arm of US premium beauty giant EsteeLauder CompaniesInc, announced a strategic investment in Chinese fragrance brand meltseason on Dec 16.Founded in 2021, melt season is positioned for high-end salon fragrances, based on Oriental fragrances, and has launched a total of 10 perfumes in two series, classic and high-end. Melt Season opened its first store in Hengfu Street in Shanghai in 22 years. Currently, there are 3 offline stores and pop-up stores with different themes for limited time.

This marks the second domestic beauty brand that Estee Lauder Group has invested in. In the third quarter of this year, Estee Lauder Group's perfume business demonstrated a 5% year-on-year growth, achieving organic sales growth for the 11th consecutive quarter. It is noteworthy that the perfume business is one of the few sectors within the group that has managed to sustain growth. Hence, it comes as no surprise that Estee Lauder has been actively expanding its presence in the fragrance industry this year. This includes the opening of Le Labo stores in China.

For the first time Shiseido China launched customized beauty

After a year of meticulous preparation, IPSA China's inaugural customized concept store, the "ULX Custom Design Center," opened in Shanghai on December 15th. The launch also saw the official introduction of the personalized customization service for their new product, the "ULX Black Crystal Cream." Utilizing IPSALYZER, the brand's exclusive skin tester, customers can delve into the advanced "ULX skin test," which covers over 20 dimensions. By accurately analyzing the customer's skin and its requirements, they can then create their own personalized anti-aging cream by precisely matching the ingredients and formulation. Once the customer's skin parameter model is transmitted to Shiseido's China factory, the product is manufactured using a dedicated production line. Approximately two weeks later, the "Young Boundless Gift Box" containing the customized version will be delivered to the customer. This endeavor by Shiseido China signifies a significant foray into the realm of beauty customization.

With premiumization strategy, Zara's revenue and profit in the first three quarters soared

Sales at Inditex, the parent company of Zara, have increased by 11.1 percent to 25.6 billion euros in the nine months ending on October 31st, compared to the previous year. Net profit also saw a significant rise, jumping by 32.5 percent to 4.1 billion euros.

Zara has strategically repositioned its brand to prioritize the "quality of sales" rather than quantity. The third-quarter results indicate a year-on-year decrease of 585 in the global store count of Zara's parent company, leaving it with a total of 5,722 stores. Furthermore, the average selling price of Zara's products is increasing.

Additionally, Zara recently held its first live broadcast on the Douyin platform. The brand drew inspiration from luxury brands‘ live broadcasting models, creating an immersive and participatory shopping experience for the audience in Zara stores， allowing them to showcase the brand's concept and style effectively. The live broadcast received nearly 1 million views, attracting attention and sparking discussions among industry insiders.

Physical Retail

Tims Coffee reached strategic cooperation with Bestore, and the first fusion store was settled in Wuhan

On Dec 14, the China operations of global coffee chain TimHortons and fried chicken brand Popeyes announced strategic cooperation with snack food brand Bestore. The two sides will explore opening small Tims Express stores in some of the Bestore stores to further expand the customer base and create a more diversified consumption scene.Through the "shop-in-store" model, a new species of "coffee chain + snack chain" will be created.

ALDI continues to increase its presence in the Chinese market

On December 16, German retail giant ALDI announced the grand opening of two new stores in Shanghai.

With the core positioning of "community supermarket", Aldi has more than 50 stores in China so far. Around the new slogan of "good quality, low enough price", Aldi introduced a series of new brand actions: the new "value" series, the iteration of hundreds of self-branded products and the optimization and upgrading of the store guide system. In the future, the proportion of ALDI's own brands in the Chinese market will reach 90%.

Marketing Hotspots

Dior officially announced Jay Chou as a global brand spokesperson

French consumer fashion house Dior announced on Dec 12 that Jay Chou has become its latest global spokesperson. It is the first time that Chou has endorsed a fashion boutique, and it is also the first Chinese in Dior's history to serve as the global" brand spokesperson for Dior Fashion.