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WHAT THE RISE OF THE CHINESE DIGITAL ECONOMY MEANS FOR AUSTRALIA16th of AUGUST 2018
DAVE RUMSEYCEO, ASAP+
INSPIRINGYOURCHINESE AUDIENCE
In the 1980’s a limited number of western brands made their way to China – it was very restricted with designated SOE stores only but evolved over the decade with JV’s and as further restrictions were lifted foreign brands began to operate and so the influx of foreign brands started.
In the 1990’s it was about following the crowd, the concept of individual consumers had emerged and citizens started to have more money but weren’t savvy in their purchasing
After 2000, Chinese consumers matured as the huge influx of foreign goods was in full swing. China had not been impacted by the Asia financial crisis and retail sales were growing. The behavior towards wanting the latest and greatest started, “they were what they bought”
The Chinese economy has continued to grow at double digit rates and although this has slowed in the last few years, middle class consumers are still optimistic that living standards will improve and their earnings will continue to increase. The Chinese consumer has become more sophisticated and the market has become saturated with both international and local brands. It is a highly competitive consumer market place, but Australian brands still have some advantages.
POWER INDEX OF BRANDS IN CHINA
115
115101 104 101
100 99
89
100 10096
9999
100 101
2010 2011 2012 2013 2014 2015 2016
Chinese brands
multinational brands
Source: brandZ / kantar millward brown
3828
2739
2014
1370
828
463
103
4000
3000
2000
1000
500
100
2010 2012 2014 20162011 2013 2015 2017
CHINA ONLINE B2C MARKET(BILLIONS RMB)
224
Source: Mckinsey meet the Chinese consumer
ATTITUDE TOWARDSTRENDS
I attach more importance to personal feelings and
style and would not follow trends blindly 56%
ATTITUDE TOWARDSSPENDING
The grading of products and services I use now is higher than before, even
though this means greater spending
60%
ATTITUDE TOWARDSBRANDS
Using products of well-known brands can lift my
self-image52%
ATTITUDE TOWARDS IMPORTED PRODUCTS
40%It is not important whether the product is
imported or not, the most important thing is whether it meets my demands
CITY TIER
GENDER
56%44%
13%23%17%19%
28%
TIER 1
TIER 2
TIER 3
TIER 4
RURAL
14%
HOUSEHOLD MONTHLY INCOME
23%
23%
26%
28%
<3,499
3,500-5,499
5,500-9,499
>9,500
AGE
14% 23%
30% 19%
13-17 18-24
25-34 35-44 45+
INTERNET INTENSITYAvg. Hours spend weekly
24% 37% 39%<14 14-21 >21
A GROWING MIDDLE CLASS Source: iConsumer China
1987 2013772 MILLION
INTERNET USERS
70%In 2025
Of Chinese will live in cities with more than 1 million people
221Number of cities with more than 1 million people
By 2030 China will add
400Million people to
cities
SPEED OF URBANIZATION BY 2030
More than the US population
CHINA DISPOSABLE INCOME PER CAPITA
Source: national bureau of statistics of china
36396
33616
31195
2884426955
24564
21809
1910917174
15780
40000
35000
30000
25000
20000
15000
2008 2010 2012 2014 2016 2018
40% 100RMB in cashOf Chinese regularly carry less than
MOBILE PAYMENTS
CASH
CREDIT CARDS
MOBILE PAYMENT DURING TRAVELS [% BY PREFFERED PAYMENT METHOD]
62%
11%3%
57%
25%33%
56% 57%
32%
11%4%
TAXI HOTELS TOURISTATTRACTION
GAS STATION
45%
While still being rolled out and more of a novelty in the Australia market, Chinese have completely adopted digital payments as a natural part of their lives.
Source: IPSOS, 2017 Mobile Payment Usage In China Report
Adults in China will spend2 HOURS, 39 MINUTESa day on mobile devicesin 2018,
11.1%+ over last year
ONLINE SHOPPING CONSUMPTION BY DEVICE (%)
2013 2014 2015 2016 2017
88 8 8 8
36 33 34 30 28
53
71
81 84
5760 57
59 57
55
77
70 67
SMART TV
TABLET PC
LAPTOP
DESKTOP
MOBILE PHONE
Source: What’s Next for China’s Connected Consumers – A Roadmap for Driving Digital Demand,
A$195,979 IN PRODUCTS IN JUST THREE MINUTES
Chemist warehouse was the first merchant on Tmall global to reach
A$1.96 MILLION IN SALES IN ONLY 46 MINUTES,
Chinese consumer use words related to
“HEALTHY” 1.6X more frequency when describing Australian products than other countries products
Chinese consumers use words related to
“NATURAL” 2.5X more frequently when describing Australian products than other countries products
A$138 MILLIONin sales on TMALL
40 PER CENT OF ANNUAL SALES
$700 MILLION are derived from China.
SOURCE: BAIN & COMPANY SURVEY OF 2000 CHINESE CONSUMERS
In 2017, there were approximately 232,000 CHINESE CITIZENS studying in the higher education institutions in
Australia.
$28B in education exports in 2017and will be over $30B this year
FY10 11 12 13 14 15 16 17
30
25
20
15
10
5
SOURCE:ABS
AUSTRALIAN EDUCATION EXPORTS
In 2017, 1.3 million CHINESE CITIZENS travelled to Australia for leisure and business trips.
$10.4B in overnight spend in 2017and will be worth over $13B by 2020.
FY13 14 15 16 17
10
8
6
4
2
SOURCE: Tourism Australia
CHINESE TOURIST SPEND IN AUSTRALIA
SIMPLE WAYS TO REMOVE THE FRICTION ACROSS THEIR JOURNEY TO YOUR BRAND
ACCEPT CHINESE PAYMENTS When Chinese travelers come and they are here in Australia. Encouraging the student + business visa carriers to spend by offering the payment methods they are familiar with.
BE ON THEIR PLATFORMS Ensure that you have a presence on key Chinese eCommerce and Social platforms and your content is in their language
TALK TO THEM Think about responding to comments in Chinese about your brand and products by creating a relationship with them.
GO BEYOND THE BASIC CHANNELS
LOOK ACROSS THE eCOMMERCE SPECTRUM
MAKING CHANGES AT CHINA SPEED
Establishing a presence on the main social channels is not
enough
Online malls like Taobao, Tmall and
JD.com and others like NetEase Kaola, Redbook and Jumei along with vertical specialists like beibei.com for a more
targeted promotions
The Chinese consumer changes at record speed so Fail fast is something that any brand should not be afraid to do – if one strategy or platform isn’t working
then change focus
UNDERSTANDING THE WORLD OF THE CHINESE
CONSUMER As the world around the Chinese middle-
class consumer changes fast Understanding how they react to those changes is pivotal and what influences
their decisions
THE RISE OF THE CHINESE DIGITAL ECONOMY PRESENTS AN AMAZING OPPORTUNITY FOR AUSTRALIAN BUSINESS
© 2018 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential.
ADOBE SYMPOSIUM John Mackenney – Principal Digital Strategist Adobe | The China Digital Landscape
© 2018 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential.
China is already a global leader in e-commerce and digital payments, and is home to one-third of the world’s unicorns
3
© 2018 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential.
China’s is one of the leading global investors in digital technologies
4
© 2018 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential.
3 factors driving potential….
5
© 2018 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential.
Factor 1 - The big and young Chinese market is enabling rapid commercialization of digital business models
6
© 2018 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential.
Factor 2 - Well-capitalized BAT players are building a rich digital ecosystem that is now growing beyond them
7
© 2018 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential.
The BAT companies are developing a multifaceted, multi-industry digital ecosystem
8
© 2018 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential.
China’s digital ecosystem is growing beyond the big three
9
© 2018 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential.
Factor 3: The government gave digital players space to experiment before enacting official regulation, and is now becoming an active supporter
10
© 2018 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential.
In Summary
11
The future looks promising…..