Weekly #4: China exits 👋, official metaverse 👾, Apple Watch ⌚, Hainan travel retail 🛍️ | Following the yuan
Weekly #4: China exits 👋, official metaverse 👾, Apple Watch ⌚, Hainan travel retail 🛍️ | Following the yuan
As China's business environment gradually returns to normal, more foreign businesses bid farewell to the second largest consumer market.
Be-Kind, which is owned by candy giant Mars since 2020, has left China, and I'm deeply sad. Less because I'm a fan, and more because its 3 years of trial may have just proved that Chinese people don't need expensive nut bars in their lives full stop. Haven’t we run multiyear experiments in life that don’t work out? Weep.
I had personally devoted time to the assumption that Chinese consumers, including myself, did need them.
While working at a design consultancy that ideated business and product ideas from 2016-2018, my colleagues and I ate loads of protein and nut bars that researchers smuggled back from the U.S., the client chose Kind's Dark Chocolate & Sea Salt Bar to model after.
It was an expensive bar to make for the small production capacity that they were willing to invest in. Plus, we needed to do community and influencer campaigns to make young people think we are ~cool~. The result was a ~US$3 snack that was out of touch from most people. Though that product is still in the market — does that mean we beat Mars? 🤔
Mars told local trade publication Foodinc 小食代 that it couldn’t find a sustainable business model, but the company would keep the production facility for exports.
My theory about its failure is that Chinese people are generally more shrewd about sugar intake and some are more sensitive about prices, candy bars disguised as nut bars cannot fool us. When it comes to nut-forward snacks, we prefer those in small packages or in bulk, Costco style. Now that’s healthier!
Let’s talk numbers: China’s energy bar/nut bar market in 2022 was US$169M (Euromonitor International), while China’s nuts snack market in 2021E was US$323M (Frost & Sullivan) for companies above 20M annual sales, we are not even counting smaller producers for the latter.
Mars apparently knows this already. While sunsetting Be-Kind, the company recently started selling Snickers protein bars in China, which is about US$1 and is endorsed by Hong Kong singer, ex-Olympic fencer, fashion designer, moving hotness, Jackson Wang. I would totally give that a go.
China’s official metaverse 👾
What happened: China launched its first official digital asset marketplace on Jan 1, 2023, which would support transactions of intellectual property, digital rights and digital collectibles (aka China's version of NFTs), according to media reports.
What really happened: An important precursor to the official move is that tech giant Tencent halted sales on its NFT platform Huanhe in August in light of scrutiny from regulators. It had more than 300,000 users at its peak and was one of the largest NFT marketplaces in China.
Wait a minute: Everything about the marketplace defies the 'decentralization' nature of digital assets:
1. The news was released first through state media China Daily
2. A physical ceremony is to be held in Beijing on Jan 1
3. It was built by State Council-approved China Technology Exchange
And of course it’s red! You can enter it here and apply to be a partner. 🙂
Life-saving❓Apple Watch ⌚
A Covid necessity: Some Chinese consumers are stocking up smartwatches from Apple, Huawei, Xiaomi and Oppo to detect blood oxygen levels, an important metric for Covid severity per National Health Commission.
People first turned to oximeters but they quickly sold out. Some brands were quick to respond that their products cannot replace professional medical devices. But hey, desperate times call for desperate measures.
Can Apple catch up? In China, Foxconn’s Chengdu factory and Luxshare Precision Industry 立讯精密 assemble Apple Watches. Thought the consumer electronics giant planned to shift production to Vietnam since Aug and said the latter would cover of the majority of the production. It is unclear whether they’re burdened by the soaring demand.
Bye bye Joyce 👋
What will happen: On Jan 15, Hong Kong’s Joyce Boutique will close the Shanghai store, its last outpost on mainland China.
Founded in 1970 by fashionista Joyce Ma (with her family’s Wing-On department store money), Joyce Boutique was considered a trend setter and one of the first boutique stores in Greater China. It had been listed in Hong Kong from 1990 to 2020.
Why leave? One can always blame the pandemic, but an essential reason is that the value of fashion boutique stores — where Chinese consumers discover new brands and designers — is replaced by the advent of social media (i.e. Instagram, Xiaohongshu) and e-commerce channels (i.e. Alibaba’s Tmall, Farfetch).
Not to mention, many designer brands, including Maison Margiela, Thom Browne, Amiri that Joyce work with, already established their own physical presence in China.
Who will remain standing? Boutique stores that know how to create buzz online with influencers and off-line with artsy exhibitions, such as Shanghai’s Looknow and Hangzhou’s B1OCK concept store.
Travel boom has come, travel retail boom next? 🛍️
It’s clear: As predicted during the last edition, the travel boom is coming and it's stronger than ever. Over the 3-day New Year's holiday from Dec 31 to Jan 2, the tropical island of Hainan was filled with people who've just recovered from Covid and with money they'd been saving for the last 3 years.
Relieved: Shanghai-listed Hainan airport said on Dec 30 that it expected to carry out more than 2,300 flights and nearly 320,000 passengers for the 3 days. The daily flight volume to Sanya from Beijing, Shanghai and Chengdu has returned to the pre-epidemic levels, according to civil aviation data service provider VariFlight 飞常准民航.
What to watch out for: In 2020, Western luxury groups invested heavily in Hainan’s travel retail scene, partially because Beijing told them to. The scene reeled in late 2021 and 2022 under zero-covid Policy.
Perhaps one of the China stories in 2023 is now that Chinese consumers have options to shop abroad, will they still fancy Hainan? Will Beijing’s promise to foreign businesses deliver?
