#52: Chinese consumers VS the market 👥, Luckin's bet on overseas & Black Myth: Wukong 🐒, Solulu to marriage rates 👶| Following the Yuan
#52: Chinese consumers VS the market 👥, Luckin's bet on overseas & Black Myth: Wukong 🐒, Solulu to marriage rates 👶| Following the Yuan
You are cordially invited to the launch party of People’s Square (details at the end) at Hoxton Books today. We start from 6pm but will move on to The Three Crowns across the street.
Hi everyone, good news! After enduring the eye injury for two weeks, I can finally put on a contact lens for my right eye. That immediately made my life better after living in unknown blurriness for so long! Now that I know my vision won’t be permanently impaired, I can finally laugh about it…
Apart from avoiding silly accidents like mistakenly using makeup remover as contact lens solution, another thing you should pay attention to is the launch of People’s Square — a collaborative event brand that encourages event ideas, including but not limited to formats such as panel discussions, art exhibitions, supper clubs, book clubs, and DJ sets.
This will initially take place in London bi-monthly with the efforts of Oliver Pearce, but we are looking to launch more chapters in other cities if there’s interest.
Oh, by the way, if you are reading this, you are cordially invited to the launch party of People’s Square (details at the end) at Hoxton Books (99 East Rd) today. We start from 6pm but will move on to a nearby pub (The Three Crowns on 8 East Rd). See you there!
Chinese consumers VS China market 👥
Luxury spending in China market is softening, but the spending of Chinese consumers remains strong. How do companies separate or group these two categories and strategize accordingly?
An August report by Citi has been bullish of Chinese consumers and their spending abroad, estimating that “Chinese nationals will return to making a ~35% contribution to global luxury spending in 2024, in line with pre-pandemic levels.” And, it added that this return would drive the recovery of the global travel retail market.
LVMH’s latest earnings call showcased the increasing difficulty of making clear of the two notions. When answering analysts’ questions about China in late July, LVMH’s CFO Jean-Jacques Guiony said: “The global consumption of the mainland Chinese cluster … takes place partially inside China, partially outside China, and you have to look at it overall.” The group’s Q2 sales in Asia (excl. Japan) dropped 14% year-on-year, whereas Japan market gained 57% in the same quarter with reported traffic from China, although the latter still remained a rather small share in group wide sales.
Quick take: LVMH’s CFO made it very clear that the group is monitoring the dynamic of Chinese consumers closely, but until it reports it separately, I don’t think it’d would be seen as consensus. It is unavoidable that China is categorized by geography, which influences how decisions are made for each market.
The diminishing willingness to spend within the border is met by the fast rebound of the outbound tourism market. And travel retail luxury consumers may see it as ‘one stone two birds’, in that they can go abroad (which is something many haven’t done since 2019), and buy ‘discounted’ luxury in regions like Japan, benefitting from low currency exchange rate.
In the piece on Hainan duty-free this March, we interviewed a consumer who noticed price comparisons between Japan, Hainan duty-free, Hong Kong and mainland China for a Van Cleef & Arpels bracelet. Brands should know that information transparency about prices, models and services have become the norm, and this will only be even more pronounced as consumers become discerning and discount savvy in their choices.
Luckin’s bet on overseas market and Black Myth: Wukong 🐒
China’s domestic coffee chain Luckin plans to launch a large-scale international expansion from Q4 2024 to Q1 2025, with a focus on the Southeast Asian and U.S. markets, according to Latepost. Local stores and some suppliers will be managed by country/region-specific franchise partners, who will choose between joint ventures, licensing, or franchising based on local conditions, Luckin told the publication.
Although internal discussions took place in 2019 (while the disgraced ex-founder Lu Zhengyao was still there), the coffee chain didn’t officially make moves until last year, around the time that HeyTea also launched overseas franchisee programs. Currently, Luckin has 38 directly operated stores overseas, all located in Singapore.
Quick take: China ‘overcapacity’ issue, made known to the world by Janet Yellen, is also present in the coffee industry. Coffee bean farms, processing plants, roasters and warehouses, and increasing number of coffee shops are difficult to align with domestic demand.
One often overlooked strength is Luckin’s unparalleled marketing power. The recent collaboration with the hit video game Black Myth: Wukong (released on Aug 20) is a great case study for Luckin’s forward-looking bets following the viral Moutai latte. Apparently, Luckin’s marketing team gave themselves a pat on the back for motivating the overlooked demographic — male audiences — to open their wallets, according to a leaked WeChat moment screenshot.
Solulu to plunging marriage rates 👶
China is trying everything to boost plummeting marriage rates, but the official solutions have sparked more backlash than enthusiasm so far.
In early August, the Ministry of Civil Affairs (MCA( released data showing that 3.43 million couples registered for marriage nationwide in H1 2024, which is only about half of the number registered during the same period in 2014, marking the lowest level in nearly a decade.
Last week, the Ministry of Civil Affairs started gathering public opinion for the Marriage Registration Regulations draft proposal. Internet users reacted particular strongly to the article regarding the removal of the requirement to provide a household registration certification (hukou) for marriage registration, which would make it smoother for couples to wed without having to go to one of their home cities.
Quick take: That is interpreted as a superficial solution, much like the announcement from All-China Women's Federation. On Wednesday, it announced that it will host a group wedding on Sep. 22 for 5,000 couples across the country under the theme “celebrating and witness happiness together with family and nation” (家国同庆 见证幸福), encouraging the new generation to wed without financial burden.
On popular comment on Weibo stated, “When something has a low barrier to entry but a high barrier to exit, it means it is extremely high risk”, a finance-y way to evaluate the life choice. Ultimately, people are concerned about the economy, not these superficial measures.
Another aspect that’s less talked about is the interconnected digital infrastructure supporting cross-region verification and preventing bigamy. It’s both impressive and unsettling.
How to use “You swan，he frog”
I’m very proud that, as of last week, a piece of Chinese social media news made its way across to the broader internet. The story involved a Hangzhou-based model named Kris Hatsenk, who posted a red-eyed picture while bidding farewell to her boyfriend. Chinese users on Xiaohongshu (also known as RED) nagged with typical comforting statements in ‘Chin-English’.
This viral sensation also inspired appropriation for the U.S. elections:
However, several elements would be hard for Chinese influencers or Chinese state media to replicate: the non-Chinese main character, which made it easier for overseas audience to relate, and the overlapping audience of Xiaohongshu and Instagram that act as bridge amid the story. Hatsenk also has account on Instagram, but her followers on XHS (310K) is more than 20 times larger than that on IG (13K).
We can expect more events like this as Xiaohongshu has grown out of a niche platform for female users in first-tier cities into a mainstream consumer app with 300 million users, 30% of which are male.
(I want to highlight that Chinese punctuation leaves a larger space behind the comma, which is something to be demure and mindful about when you use the phrase!)
Last but not least, here’s the itinerary for tonight:
• 6-7pm: launch party @Hoxton Books (99 East Rd)
• 7:30pm and onwards @The Three Crowns (8 East Rd)
What we intend to do:
People’s Square, a landmark and a major subway transportation hub in Shanghai, accommodates the city's largest traffic flow and a diversity of ideas and activities. It’s a place where people gather, exercise, eat, and on weekends, try to find love at the matchmaking corner.
As former residents of Shanghai, we often overlooked the significance of People’s Square. However, in an era where China's image is increasingly polarized by both internal and external political forces, we now find the name and essence of People’s Square to be deeply inspiring. Our mission is to create a welcoming environment for meaningful discussions about China from a consumer lens.
We invite proposals for events and meet-ups in the form of panel discussion, art exhibition, supper club, book club, DJ sets, we are happy to assist with venue and logistics if we think your idea and our mission are a good match.
Feel free to submit your idea here whether you’re based in London or not. 🔚