🐉 10 consumer trends that will continue to shape China in 2024 | Following the yuan
Along with 10 (12) questions I'm asking on beverage, fashion, beauty, pet, retail, travel, corporate governance and more.
Happy New Year, my friend! Where were you during the countdown? I was in a hotel room in Urumqi because my flight back to the south was canceled. Such fun!
I’m yet to write my 2023 reflections because… it’s not the Chinese new year yet? So expect some sob stories sometime in mid-February, instead. This week, I handpicked 10 items from last year’s weekly consumer news that I will continue to watch.
There are different types of trends and phenomena: some are short-lived and transitory, and some are long-lasting and may have business implications for years going forward.
This non-conclusive list is organized in chronological order, and encompasses sectors including beverage, fashion, beauty, pet, retail, travel, corporate governance and more. I'm also adding original links and my question for each item below. Enjoy!
(PSA: If you are new and want access to the archive, please consider becoming a paid subscriber or directly reply to this email for a 1-month comp trial!)
1. Chinese women bid farewell to heels, embracing outdoor style 👠
Fewer women want to wear high heels in China, which is causing public Chinese footwear companies, such as Red Dragonfly (603116.SH), Saturday Co. (002291.SZ), and Daphne (0210.HK), to flounder. Part of it is also due to the rise of outdoor sports and fitness culture, including gorpcore and mountaincore, that are shaping consumers everywhere. [👉read more]
One more Q: Are footwear companies hedging the negative impact by launching/acquiring sports brands, doing collaborations with outdoor brands, or producing more products that align with the trend?
2. Celebrities and music festivals come to the rescue of local tourism 🤑
Jay Chou's 2023 world tour in Haikou this summer generated a staggering 976 million yuan (US$137.4 million) in tourism revenue for the city in just four days. This exceeded the revenue generated during the five-day Labor Day holiday by about 100 million yuan. Similarly, TFBOYS and MayDay’s concerts in various cities, Midi Music Festival in Nanyang all had similar effects. [👉read more]
3. The fitness industry struggles to adapt to outdoor-loving commitment-phobes 🏋🏽
With the rising popularity of point-based programs such as ClassPass and Super Monkey, as well as outdoor community events, chain gyms including Tera Fitness and Fine Yoga went out of lights, and their peers maintain struggling. The fitness industry is forced to adapt to changes in consumer preferences post-Covid. [👉read more]
One more Q: Many fitness chains are already shortening their membership periods and organizing more offsite community events, what more can they do in 2024?
4. Social media steals business from online travel agencies 🛫
After several phenomenal tourism marketing successes from Zibo BBQ to Shijiazhuang rock festival, social media platforms including TikTok’s sister app Douyin and ex-education company New Oriental’s livestreaming platform East Buy Holding both registered their own tourism agency in August. [👉read more]
One more Q: How are OTAs and hospitality groups countering forces from, or partnering with these social media companies, and are they working?
5. China beverage brands are expanding overseas in droves🧋
Having established over 10,000 stores in China, Luckin is using Singapore as a hub for its expansion into Southeast Asia. HeyTea, on the other hand, ventured beyond Asia with its first franchise in London's China Town. Other peers that have jumped on this bandwagon include Mixue Ice Cream & Tea 蜜雪冰城 (have IPO plan in HK), Chagee 霸王茶姬 and Nayuki Holdings 奈雪的茶 (HKG: 2150). [👉read more]
One more Q: How does the model of direct VS franchise stack up each other for these beverage brands in their overseas expansion?
6. China consumer brands please the government with ESG efforts ♻️
Mass Chinese consumers are overwhelmingly choosing convenience over ethical concerns. As a result, large companies care more about responding to the central government’s carbon neutral goal and the ESG movement in corporate governance when they launch ESG initiatives, focusing on supply chain over new stock keeping units (SKUs). [👉read more]
One more Q: The sustainability awareness among people is rising but slowly, will it be further impacted by the economic slowdown?
7. Lower-tier market is the new growth point 🏆
While China’s economic growth has slowed, it’s logical to tap into more regions to harness the population dividend, just like what foreign brands did to China 20 years ago. Here are three local examples that are already excelling: Retail chain Pang Dong Lai 胖东来 (no IPO plan), Hotpot supermarket chain Guo Quan 锅圈 (HKG: 2517), and Chinese burger Tastien 塔斯汀 (have IPO plan). [👉read more]
One more Q: Compared to tier 1~2 cities, hat can large businesses do differently in tier 3~4 and tier 5-8 regions when it comes to branding and products?
8. A large dog hurt a little girl, and dog owners are worried 😭
After I noted that pet sector could be one of the few spaces that’s free from crackdown concerns, China’s lack of animal protection legislation has been tested by in October the societal aftermath of a toddler’s injury by a Rottweiler. Afterwards, an uneven clampdown on large dogs and strays, and backlash from non-animal lovers was witnessed across China, which triggered fear among dog owners. [👉read more]
One more Q: How will the sentiment affect consumption habits of existing dog owners, and how may it be built into the perception of aspired pet owners?
9. 3 post-Double 11 festival doubts are left to be answered in 2024 🤨
Doubt 1 ✨: How special will Double 11 be going forward?
Historically, Double 11 is the shiny star of all e-commerce festivals; it’s also a a successful example of how China adapted a U.S. concept (Black Friday) to be its own game and grow it to be a lot more significant. Now, that era is long gone. What would it become in the future?
Doubt 2 ✨: How can top livestreamer Li Jiaqi reincarnate?
Over the years, Li has diversified, participating in reality shows, and incubating supporting livestreamers to sell on his livestream channel during the day. How can he make sure to keep attracting eyeballs while allowing his team members to thrive?
Doubt 3 ✨: Will ‘instant retail’ be the next big thing?
Based on food delivery models, ‘instant retail’ seems to be a buzzy word with loads potential. The Ministry of Commerce said that there were 40 billion instant retail orders in 2022, and it is estimated to double its market size in 2025. How will it change the retail landscape if not already?
10. CVC investment trend in China’s consumer sector 🏦
The so-called ‘new consumption’ brands, which could easily get venture capital backing in previous years, have now become the new targets of corporate venture capital. Examples including Anta Sports (HKG: 2020) x Maia Active, Estée Lauder (NYSE: EL) x fragrance brand Melt Season & influencer-led beauty brand Codemint, L’Oréal (EPA: OR) x perfume brand Documents. [👉read here & here]
One more Q: The fact that China’s consumer VCs have dried up and US VCs further de-risk from the market is only going to push these startups closer to their ‘frenemies’. Will the trend stick out even more in 2024?
Following the yuan is a reader-supported publication. To receive new posts and support my work, consider becoming a paid subscriber.