The Taxi Standoff: Since January this year, in an effort to gain users for their e-payments services, Alibaba and Tencent have entered heavy competition in the new market for taxi app services

Published in FOCUS magazine in May 2014.

Visitors and residents, expats and locals alike know the heartache of attempting to hail taxis in Chinese cities, while drivers are choking on higher fuel costs and suffocating traffic. Taxi apps are designed to take the agony out of basic transportation. But, as the competition becomes cutthroat, new issues arise. Here’s a look at
what China’s major urban centres have to offer in taxi travel.Guide Taxi App Guide

On 10 January, Tencent’s taxi app Didi Dache launched an aggressive discount programme, offering users three coupons of RMB 10 each and drivers five commissions of RMB 10 each on top of their regular fare day if passengers book apps through WeChat Payments, which Tencent owns. Ten days later, Alibaba made a deal with Kuaidi Dache and launched the same programme to those who book through Alipay Wallet, Alibaba’s mobile payment service. These two companies control 90 per cent of the taxi app service market. Kuaidi Dache also had a Beijing beer giveaway campaign, handing out to gain users of Tenpay, Tencent’s e-payment service, while Alipay Wallet provides the same service for Alibaba’s e-payment business, Alipay. This competition for taxi services is just one battleground for the greater war over e-payment
market share. Last month, both WeChat and Alipay Wallet also offered online-to-offline movie ticket payment services.

Although Kuaidi Dache has not released any formal data on their user base growth gained through their discount coupon campaign, many in the Chinese media believe Didi Dache came out ahead. According to data released in April, as recently as January of this year, Didi Dache’s bookings logged in 350,000 taxis a day with 400,000 registered drivers and 22 million registered smartphone users in 30 cities. By late March, the numbers had skyrocketed to over five million rides per day with over 900,000 registered drivers and 100 million passenger accounts in 178 cities. However, the voucher pricing war cost Didi Dache RMB 1.4 billion (about US $225 million).

Now that the number of users has increased, the companies are no longer offering frequent discounts in most cities. However, a recent study found 26 per cent of app users still pay via mobile payment. During busy times, riders can offer tips – not customary in China – in RMB 5 increments, to bid for taxi drivers. Apps prompt users if their bid is not high enough. Reporting on China’s social media service Sina Weibo, one driver claimed he made RMB 2,300 (US $374) in tips in one day. Many drivers juggle various apps simultaneously on multiple smartphones all mounted on their dashboard.

 

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Domestic firm Xiaomi is looking to rival global giant Apple in the technology market

Published in FOCUS magazine.

Designer, developer, and retailer of smartphones, apps and consumer electronics, Xiaomi ranked third in Fast Company’s 2014 list of ‘Most Innovative Companies’ – the only Chinese organisation to make the cut. Now the largest smartphone maker on the Mainla nd and nicknamed the ‘Apple of China’, Xiaomi could be a game changer. The company’s success could prove China is a strong importer and exporter, a producer of low-cost, low-quality goods, and a developer of innovative, high quality products.

Xiaomi was founded in October 2011 and has been growing rapidly since. In the first half of 2013, the company’s revenue reached RMB 13.27 billion, totalling all of its sales in 2012 – when it grew 150 per cent. In August, the organisation received a valuation of US $10 billion after its most recent round of funding. To put this into perspective, it has already matched Lenovo’s market value and doubled that of Blackberry. Xiaomi’s rapid success comes from its strategy of social media-focused flash sales, constant user experience adaptation, and profits based on software instead of hardware. Using flash sales rather than relying on traditional new product rollout methods, Xiaomi increases hype and demand for its products.

The company sells phones in 200,000 to 300,000 limited quantity batches directly to consumers via Sina Weibo, China’s 400 million-member equivalent of Twitter. Most new product releases sell out within an hour, but the Redmi model vanished in 90 seconds, with more than US $7 million in pre-orders. These small quantities allow Xiaomi to better understand consumer interest in products before the company commits to larger production quantities. By year’s end, many believe Xiaomi will be a top-five client of Foxconn, a major high-volume technology manufacturer involved with Apple products as well.

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FEET FIRST: Discarded weekly by millions of farmers in the UK, chicken feet and pig trotters could be worth millions if exported to China

Published in FOCUS magazine in March 2014.

China is one of the top ten biggest food and drink markets for the UK – and its growing fast. In the first half of 2013, exports from the UK to China grew 126 per cent, reaching £102 million. In December, British meat producers accompanied David Cameron as part of his trade visit to China in an effort to promote the sale of various meats, including
chicken feet and pig trotters – both Chinese delicacies.

Chicken feet are fried, seasoned and eaten as a snack, while Chinese eat pig trotters in a stew, braised, or on a stick. Exporting these products is already big business for the US, Brazil and Argentina; for the UK, the market potential is huge. Exporting pig trotters alone could provide UK farmers with an additional £7.5 million a year. This is dependent, however, on whether the relevant permits and regulations will allow such sales in China in the future – an on-going area of discussion.

As the world leader in breeding economical pigs, Britain is in a unique position. Their meat is considered high quality and British pigs eat less, grow faster, and reproduce more quickly than Chinese pigs. These factors make a British pig half the cost of its Chinese cousin.

Other countries have already used their low production costs to compete in the Chinese market. In 2012, China imported 231,700 tons of chicken feet, worth £214 million; in the first three quarters of 2013, 169,000 tons came from the US alone. In the United States, chicken feet are worth around two cents, but the Chinese can sell them for U$S0.42. The UK selling
chicken feet to China could add an extra 15 per cent of revenue, or £1.50, per chicken in profit, to the already £4.4 billion UK poultry industry.

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Diamond Deals

Published in FOCUS magazine in February 2014.

Today, China is the world’s second largest diamond market, tripling in size in the past five years to US$22.8 billion. Sotheby’s in Hong Kong was also recently host to the record-breaking purchase of a US$30.8 million white diamond. As with many luxury trends in China, at first the con- sumer base wants nothing less than what they perceive as ‘best in class’ items, but as the market matures, tastes become more sophisticated. Currently, Chinese are rivalling European and American preferences for mid-range diamonds. Having seen sales increased 31 per cent in the past three years, this range shows dramatic growth. Previous consumers focused on quality, specifically the diamonds’ clarity, but new consumers understand that high and low quality diamonds may not differ greatly in appearance. Last year, SI dia- monds (the rating Slightly Included, meaning with minor internal defects), which have the same level of clarity American consumers favour, accounted for 30 per cent of sales in China.

Domestically, to cash in on the less-than-premium diamond trend, a factory in China also plans to mass-produce synthetic diamonds, potentially manufacturing 480,000 carats of rough a year. Although many synthetics are for industrial purposes, they can expect to fetch 20 to 30 per cent of the price of natural diamonds. Although the factory intends to ensure buyers know the goods are lab-grown, those farther down the supply chain may not get the message.

Consumers and investors are also seeing these gems with more clarity; diamonds are not only a luxury, they are an investment. In the past, many saw gold as the best hedge against inflation, but countries often use gold to impact exchange rates, making diamond values less vulnerable to economic trends.

Many factors make diamonds a solid investment. For example, while high-end diamonds account for a small amount of produc- tion, lower quality diamonds can offer higher revenue. Additionally, experts predict diamond supply will grow at a compound annual rate of 2 per cent versus 5.1 per cent demand globally, which will put further pressure on prices. Investors attribute this to a decline in kimberlite, the host rock for diamonds, and the decrease in legendary miner and trader De Beers’ historic stock. In the past, stored gems have acted as a buffer when global diamond stocks have declined, creating more consistency in supply.

 

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China’s Li-Ning Sticks to its Roots to Build Consumer Clout Over Nike, Adidas

As originally published on brandchannel.com. Article made top 5 most viewed.

In China, the sporting apparel market is a bit of an anomaly. For one thing, fitness and physical activity in China is a lot less common than in other global markets like the US, Europe and South America. And when Chinese consumers do hit the gym or track, it’s usually in their street clothes.

That presents a unique challenge for both foreign and domestic brands like China’s Li-Ning, the oldest and second-largest Chinese sporting goods brand. Facing the relentless competition of Nike, adidas and Under Armour on both its home turf and abroad, Li-Ning has had to adjust its product and growth strategies to focus less on hard-core athletic gear as a free-expression trend continues to grow among China’s fashion-savvy youth.

Established in 1989, Li-Ning, which sells basketball, running and women’s fitness apparel, dominated the Chinese market until the late 90s, when Nike and Adidas gained force in China. But, the company has hit hard times in the last few years. In 2012, Li-Ning sales declined 25 percent, allowing ANTA, a local competitor, to become the largest sports retailer. Despite closing 410 stores in 2013, Li-Ning still has the largest distribution network, with 6,024 stores throughout China. The brand gained back some strength in 2013, with inventory reaching relatively normal levels and same-store sales at directly-owned stores increasing 9 percent in the first half of 2013.

Much of the loss over the last several years was actually a result of the sports boom following the 2008 Beijing Olympics, after which, on average, 11 sports apparel stores opened per day in the country. Li-Ning and other local brands were forced to dump products on the market at severe discounts, stripping the brands of their value as compared to Nike and adidas, which are more highly-regarded among Chinese consumers.

But Li-Ning, which also markets products under three sub-brands—Double Happiness, AIGLE, and Lotto—has since focused on rebuilding its brand value and differentiating itself from foreign competitors. The brand re-embraced its lower-priced roots in order to expand to China’s second and third-tier cities, adopting the slogan “Anything is Possible.” But Li-Ning is not alone, as adidas opened up some 500 new stores in China’s higher and lower-tier cities in 2013, flaunting its Neo and Originals labels to appeal to trendy Chinese youth.

One aspect where Li-Ning has been comparatively successful is with sponsorship deals, mainly with NBA star Dwyane Wade. The brand, which signed Wade in 2012, has built up its brand awareness abroad and its street cred among basketball-obsessed Chinese with the deal, which has seen Wade release personalized basketball shoe and gear designs for the brand. It has also focused much of its growth on e-commerce—a rapidly growing channel in China.

Li-Ning, which is already the third largest sports apparel company in the world, has also expanded to the US. In 2012, the company rolled out its US branded website, which has seen a 600 percent increase in web traffic since its soft launch in late 2011. The company differentiates itself by emphasizing its Eastern philosophy around movement.

But relative success in the US won’t keep Li-Ning afloat in the global market that is still being driven by its home country. adidas, Nike and Under Armour continue to invest in China, debuting unique merchandise and retailing concepts, like adidas’ new HomeCourt store design and Under Armour’s “Retail Theater” experience in Shanghai, which also aims to speak to the specific athletic needs of Chinese consumers.

Will Li-Ning be able to break free from the stigma of Chinese brands in China? Only time (and the addition of another major brand ambassador) will tell.

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Singles Market

As published in FOCUS magazine’s December issue.

Just as Western companies use Valentine’s Day to capitalise on budding – or established – relationships, Single’s Day celebrates anoth- er special someone: me, myself, and I. Instead of an evening of flowers, chocolate, and gourmet cuisine, this holiday sees pyjama-clad consum- ers sitting at midnight in front of lit computer screens, hoping to snag deals from top online retailers.

Born in universities during the 1990s, the day has its roots in Chinese culture. The four “ones” in 11 November reminded students of the character for ‘bachelor.’ Translated, the word means ‘bare branches’; in China, the parents are the trunk of a tree that may or may not bear fruit.
Holiday folklore credits four bachelors playing the popular board game mahjong on 11 November from 11am to 11pm with the four columns card (11.11) always winning. However, this quirky coincidence did not become the year’s biggest shopping day until 2009, when e-commerce conglomerate Alibaba decided to cash in. Last year, 10 million shoppers visited Alibaba within the sale’s first minute. The subsidiary Tmall hit RMB 100 million by the end of minute number two.

After the midnight deals, singles kick off the next morning with four youtiao, deep-fried dough sticks, to represent the four ones, with a steamed, stuffed bun as the middle dot. For dinner, [men and women] will split the check; unlike Valentine’s Day, this is acceptable as it shows their independence.

Please contact to full article.

Boating Bonanza

As published in FOCUS magazine in the November issue.

China’s economic slow-down saw a negative impact on most luxury industries, but yacht sales have grown hand over fist. from 2006 to 2011, the industry swelled 732 per cent. Last year, 3,000 yachts  were sold in china; by 2020, experts expect the numbers to hit 100,000. Seizing the opportunity, Chinese producers are stealing market share from more respected American, british and italian brands.

It’s a popular misconception that yachting is the province of the super rich. In Europe, 84 per cent of yachts are worth less than 50,000 euros. As Chinese income levels rise, demand for small- and medium-sized yachts will increase.

Domestic yacht production is still in its infancy, but over 75 mainland manufacturers have captured the profitable middle- and low-end market, with prices 20 to 50 per cent less than foreign brands. with lower prices, they also offer better, localized after-sale service; unlike with foreign firms, owners can maintain and repair their yachts domestically.

The mega-yacht level has a small pool of potential buyers, which means the ability to predict customisation preferences is advantageous. domestic manufacturers have a better understanding of local tastes. In addition, buyers who can afford to dock multiple vessels in different ports for different seasons.

This is a sample. To read more, please contact me.

In China, Under Armour Looks to Brand the Workout Experience

As published on brandchannel.com on October 29, 2013.

Earlier this month, Under Armour introduced a completely different retail concept to the Chinese sporting apparel market—a market that has proven hard to crack even for the most seasoned retail veterans, including Nike and Adidas. But Under Armour’s new Shanghai retail theater experience aims to do much more than just sell clothes and sneakers.

Located in the Jing An Kerry Centre, the store features a 270-degree screen that covers 90 percent of the relatively small boutique, encapsulating store-goes in the sights, sounds and experiences of athletic training—a truly foreign concept in China and greater Asia.

In China, especially, working out is not a common activity. Seeing joggers is a rarity and oftentimes in the gym, Chinese are seen wearing jeans or leather shoes as opposed to sporting apparel. Sports participation is also low due to lack of time, the single child policy, and limited governmental support to popularize sports. But, there is still huge market potential; after the Beijing Olympic Games, there has been dramatic growth in sporting brands.

Still, the market has proven difficult, with Nike, Adidas, and others struggling to localize their retail approach to fit the unique needs of Chinese consumers, both young and old. In fact, Nike and Adidas have spent much of their time in the country with a hard focus on building a lifestyle brandaround young consumers, capitalizing on consumer trends towards creativity and self-expression. Still, Nike recently saw a three percent decline in its China sales while it experienced an increase in all other geographic locations.

So Under Armour, a brand built largely on its popular undergarments, is instead focusing on introducing the idea of athleticism to Chinese consumers, putting retail sales second. “You walk in the store going how do athletes train?” Under Armour CEO Kevin Plank explained in a press release. “In China they don’t exercise, so they’re going, why do I exercise? It’s a tutorial on why would I train.” Guests are greeted by a familiar, athletic face: Michael Phelps, who took home eight gold medals at the Beijing Olympics, serves as the store’s virtual host.

“Wherever we go around the globe, we will lead first with our story and bring the people into the best Under Armour experience possible before we ask them to try our performance apparel and footwear,” said Plank.

The company, which as experienced steady quarter-by-quarter growth over the years, saw a 26 percent increase in revenue in the third quarter ending Oct. 24, growing by over 20 percent for the sixteenth consecutive quarter, according to Seeking Alpha. Netting its highest revenues from apparel, followed by footwear and accessories, the retailer shows a lot of promise—that is if it can maintain its impressive growth rate.

In order to do so, the relatively new retailer is doubling down to turn its largely North American-based business into a global brand. Last year, of Under Armour’s $1.8 billion in revenue, less than 10 percent came from global sales, compared to Nike, where more than half of sales come from outside the US. Plank’s plan is to double overall and international revenues by 2016—a difficult goal, for sure, but one certainly in reach for the hard-nosed company. In fact, Plank says, by the end of the year, Under Armour will have more international offices than those in the US. Beyond China, the brand is especially focused on growth in Latin America, with upcoming opportunities in the 2014 World Cup and 2016 Summer Olympics in Brazil to help make in-roads.

Still, China plays a major role in Under Armour’s ability to become a global leader in sports retail. In the last two years, the brand has opened six stores on Mainland China and one in Taiwan and Hong Kong, and the fact that the company manufactures over 50 percent of its products in Asia makes it easy to distribute new designs quickly to the market as the company expands in the region in the future.

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Refinery29 Resists Growing Pains with Renewed Focus on Content, Consumers

As published on brandchannel on September 27, 2013.

Refinery29 has hardly had a chance to settle into its new, larger office and its updated online digs. With 800 percent revenue growth in the past 24 months, it is the fastest growing company in the media division of Inc. Magazine’s 2013 5000 list. The fashion-focused site uses its strong consumer loyalty to help brands connect with Millennials, a consumer base that spends $200 billion annually, according to Chicago-based investment firm William Blair & Co.

“A lot of marketers are asking a lot of questions or intrigued by how it is they speak with a whole generation of consumers that are growing up with very different viewpoints, and technology, and opportunities, some challenging and some good that the generation before has had to deal with. It’s created a very interesting conversation,” Melissa Goidel, Refinery29’s Customer Relations Officer told brandchannel. “The thing that makes [Refinery29] unique is that we are actually creating the content of the conversation, where as those who play in the space with us are really more of the channel for the conversation.”

Known internally as the ‘R29 wink,’ the site has developed its own voice that is approachable and tailored to its users. As Christine Barberich, Refinery29’s Editor in Chief explained, “Our readers come to us for our own unique point of view, as well as the reactions and conversation from their fellow readers. Our audience feels personally connected to Refinery29, our editors, and our content because we create it with them at the very center of it…we share and talk to each other, we never dictate. And that really does make a reader feel like this experience and content was created expressly for them.”

One way the site achieves its ‘friendly’ nature is by avoiding out-of-reach, aspirational model shots that you might find in Vogue or W Magazine, instead opting for ‘real’ people, sometimes its own employees, to model new trends. The down-to-earth approach stretches across its content, too, with the site presenting a mix of high- and low-fashion in an effort to be relatable on all levels.

“They’ll be Alexa Chung and then another [article] about someone who knows how to rock a pair of Keds in a new way that’s totally dynamite,” said Eben Levy, the Director of User Experience. Women are especially attracted to the site because they can find trends that fit their own style using items that are in their price range or are already in their closet.

But perhaps what has made the site most successful is its ability to mix R29 content among branded, promotional pieces. For one thing, Refinery29 always has a role in the branded content. For instance, Levy exlains that a recent article featuring Levi’s clothing was written and shot by R29, who interviewed 10 entrepreneurs and photographed them in Levi’s attire. For the consumer, this content helps reposition Levi’s from its cowboy image—and protects R29’s content standards.

“[Brands] are coming to us as this authoritative connection to this audience. And they want to engage,” Goidel told brandchannel. “Generally speaking, it starts with activation against this audience because they know we have the credibility and they want to approach them with a new idea—they either have that connection or the consumer doesn’t realize they have that offering or service.”

Its personalized approach, to both readers and brands, is what continues to set Refinery29 apart from its competitors. “It is our business to create amazing content that Millennial women want to engage with and we do that as passionately for brands as we do for our own purposes,”—and it shows.

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