[video] How migrant workers are driving China’s economy
The rise in spending power of China’s 220m migrant workers is supporting the country’s economy as manufacturing stalls. James Kynge, principal of China Confidential, explains how a labour shortage is inflating wages and what this mighty consumer cohort is buying.
The timing is exquisite. Just a day after China’s government said the country had entered a period of slower growth, along come two companies from opposite ends of the consumer goods spectrum (both French) to illustrate what the change means. Feeling the pain is LVMH, the luxury conglomerate. First quarter sales in Asia (outside Japan) grew by 12 per cent. That is not bad, but it is a slowdown from the 17 per cent growth reported in the same period in 2012. Continue reading »
Ikea in China: turning gawkers into consumers
Ikea’s flagship store in Beijing is among the group’s most heavily trafficked in the world – with more than six million visitors in 2011. But how much time and effort does it take to translate those visits into sales?
It’s an important question given that the Swedish furniture giant has this week announced plans to boost the number of stores in China from 11 to 40 over the next seven years. Continue reading »
Apple’s China apology: the reaction
In China, saying sorry is a big deal. So it made national news on Tuesday when Tim Cook, chief executive of Apple, issued a public apology to Chinese consumers for any “concerns or misunderstandings” they might have had due to poor communication over Apple’s warranty policies.
After a coordinated attack on Apple from state media and regulators during the past two weeks, it seems the US tech company had little choice but a public show of contrition. After all, China is the world’s largest smartphone market, and accounted for 16 per cent of Apple’s sales in 2012. Continue reading »
The business of death in China
Death is big business in China at this time of year, as the annual Tomb Sweeping festival approaches, boosting demand for virtual iPads, iPhones and even mistresses offered up to entertain the deceased in the afterlife (or to console him, if his grave gets moved to make way for another golf course or superhighway). Continue reading »
Adidas in China: reaching out
If there is one thing that China’s smaller cities do not lack, it’s sportswear stores. The average fourth-, fifth- and sixth-tier Chinese city – everyone defines their tiers differently – has a high street with multiple Chinese sportswear retailers lined up in a row. Do these towns really need more running shoes?
Adidas certainly thinks so and its latest greater China sales – up 15 per cent in 2012 – seem to indicate that it’s right. The German sportswear brand, currently number two by sales behind Nike, has expanded into 350 more Chinese cities in the past 18 months, to 900 in total. Of the 800 stores opened last year, 400 were in lower-tier cities. The goal is to have 1,400 cities buying Adidas by 2015. Continue reading »
[video] China’s annual mass migration
Every year, China stages the largest human migration on earth as up to 1bn people go home to their roots. The FT’s Patti Waldmeir reports on the phenomenal combined buying power of China’s 260m migrant workers and looks at the type of gifts they are buying this year.
China art market: auction houses see slump in 2012 sales
By Georgina Adam
The Chinese art market, which in 2011 was reported to have leapfrogged the US to become the largest in the world, took a severe battering in 2012 and may have already lost its number one position, according to the front-page story in February edition of The Art Newspaper.
According to the publication, sales at China’s two largest auction houses, Poly Auction and China Guardian, have plummeted by more than half. Poly, part of a conglomerate which also includes the Chinese People’s Liberation Army, saw sales drop from $1.9bn in 2011 to $965m in 2012. China Guardian reported $1.8bn in 2011 but just $820m in sales in 2012. Continue reading »
Chart of the week: consumer goods in China, moving fast
In the world of fast-moving consumer goods – known as FMCG in the retail industry – China is a big prize. With a rapidly-expanding middle class, and the quick adoption of western brands alongside home grown products, it’s also a highly competitive market.
So which companies are making headway? Chart of the week takes a look. Continue reading »
China & India: hey, big spenders!
Worried about the global slowdown? A Chinese hard landing? An Indian stagnation?
Here’s a new tome from the team at Boston Consulting Group to cheer you up. Entitled The $10 trillion prize, it forecasts how the combined Chinese and Indian consumer markets will reach $10tn by 2020. And it tells you to get stuck in – or watch your Chinese and Indian competitors eat your lunch. Continue reading »
Aga’s adventure in China
Aga Rangemaster, the company behind the quintessentially British range cookers, has entered the world’s largest market – China.
It might almost be going to Mars. The Aga name is synonymous with upper class British rusticity, where family and friends share the cosy conviviality of oak kitchen table, generous upholstery and the warmth emanating from half a ton of enamelled cast iron.
Upper class Chinese may well fancy the Bentley outside the window but it is hard to imagine Shanghai’s restaurant society entertaining friends at home, in the kitchen. Continue reading »
China: not lovin’ McDonald’s quite as much
Among the more glaring details in McDonald’s weaker-than-expected second-quarter results on Monday is the performance of its Asia-Pacific, Middle East and Africa division.
After seeing revenue from the division jump 18 per cent last year and 5.5 per cent in the first quarter, demand from these markets has ground to a screeching halt and was nearly flat for the three months to the end of June.
Like-for-like sales increased just 0.9 per cent, operating margins fell 170 basis points to 15.3 per cent and operating income dropped 2 per cent (although they increased 1 per cent on a constant currency basis). Continue reading »
North Face owner gets a China filip
Among global consumer businesses, the move into China’s lesser-known big cities has been a bandwagon not to be missed. But VF Corporation – the owner of brands including North Face, Wrangler and Timberland – is showing there’s an upside to being late to the game: it makes it easier to keep sales growing even as China’s economy slows down.
While Burberry and others have already shown the ill-effects of a slower China in their results, VF on Thursday reported accelerating sales growth. Its China revenues rose by 30 per cent in the past quarter, exceeding growth of 20 per cent in the previous quarter. Continue reading »
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