Asia - Europe Business

China’s New Pragmatic Consumers

McKinsey Quarterly today published a new report concerning Chinese consumers, the report said that Chinese consumers are behaving like their counterparts in the developed world. They are more demanding and pragmatic than ever as their horizons expand beyond basic concerns about product features. Also, they are willing to pay for better value and quality and are spending more time researching and are exploring product nuances. McKinsey’s 2010 survey of China’s consumers also found that they are blazing a uniquely Chinese trail. The country obviously offers some of the world’s biggest growth opportunities—but only for consumer product companies that understand and respond to this rapidly evolving marketplace. Read more…

Lisa

News From China: DaHongPao

 
Worried gold has topped out? Don’t trust the stock market? Can’t raise the money for real estate?

Some in China claim to have the tonic for your investment blues.

In a new special report, China’s state broadcaster CCTV delves into the stunning rise of dahongpao, a once obscure tea from the southern coastal province of Fujian that has suddenly become one of the country’s hottest commodities.

Since the middle of last year, prices of certain types of dahongpao have increased tenfold. According to one expert interviewed by CCTV, the wholesale price for mid-range varieties of the tea has risen from between 200 and 400 yuan to around 4,000 yuan per kilogram, with retail prices reaching 20,000 yuan or more. CCTV found one retail shop in the Fujian city of Xiamen that claimed to be selling one variety for 200,000 yuan, or roughly $30,000, per kilogram. “I never thought it would get so expensive,” CCTV quotes tea producer Wu Zongyan as saying. “It’s one price one day, another price another day. Between when we pick the leaves and when it’s ready to sell, the price has already gone up.”

The dahongpao phenomenon mirrors in exaggerated form the burgeoning demand in China for high-end French wines. In both cases, high prices suggest buyers aren’t in it for the sipping pleasure but instead are purchasing the beverages as an investment.

Strange as it may sound, this isn’t the first time Chinese tea prices have gone stratospheric. A few years ago, puer, a smoky-tasting tea from Yunnan Province typically pressed into saucer-sized cakes for storage, underwent a similar transformation from tea-lover’s fetish to luxury-grade investment. Prices for some puer cakes reached the tens of thousands of dollars before crashing back to earth in 2008.

The attraction of dahongpao, a form of Oolong, is its rarity. Grown only in a small mountainous area in the Fujian interior, all genuine dahongpao is said to come from cuttings of a handful of trees originally planted to provide tea for the imperial family during the Ming Dynasty (1368-1644 A.D.).

CCTV explains the dahongpao craze as a reaction to uncertainty over real estate and stocks, among the only traditional investment outlets available to the average person in China. To meet demand, exclusive dahongpao shops have been multiplying across Fujian—from 200 to more than 1,500 in the town, Wuyi, where the tea is produced—while fake dahongpao has begun to flood the market. But in a bad sign for would-be investors, CCTV finds many of the new retailers losing money, unable to unload their more expensive tins.

In other words, this particular tea party may not be going on much longer.

Lisa

China Trade Surplus Drops 30.4% MoM

China recorded a trade surplus of $20.03 billion in August, down 30.4% from July, as exports rose 34.4% year-on-year to $139.3 billion and imports expanded 35.2% year-on-year to $119.27 billion, according to data released September 10 by the General Administration of Customs. The combined value of China's imports and exports rose 34.7% year-on-year to reach $258.57 billion in August.

The country's trade surplus in the first eight month of the year stood at $103.9 billion, down 14.6% year-on-year, according to the announcement.

China's trade surplus in July stood at $28.7 billion, up from June's surplus of $20.02 billion.

Lisa

Turnover Of Telecoms Industry Up 21.7%

The Chinese telecoms industry recorded a 21.7 percent year-on-year increase in total turnover to 967.38 billion yuan in the first four months of the year, according to the Ministry of Industry and Information Technology.

Revenues from the telecom industry's main businesses in the first four months rose 5.7 percent year-on-year to 284.55 billion yuan, of which the mobile sector accounted for 68.14 percent or 193.88 billion yuan, an increase of 11.5 percent year-on-year. 

Revenue from the fixed-line business was down 4.8 percent year-on-year to 90.67 billion yuan, accounting for 31.86 percent of total revenue.

China had 111.02 million broadband users as of end April, including 7.795 million new users added in the first four months.

Lisa

MIIT Reports 4Mth Telecom Stats

China's telecommunications industry recorded operating revenues of RMB 284.55 billion in the first four months of 2010, up 5.7% year-on-year, reported by the Ministry of Industry and Information Technology (MIIT) on May 25. Mobile communications generated revenues of RMB 193.88 billion, or 68.14% of the total revenues in the sector.

The number of mobile phone users in China rose by 39.12 million in the first four months to reach a total of 786.5 million by the end of April, while broadband users increased by 7.8 million during the period to hit 111 million. Fixed-line user numbers decreased by 6.14 million to 307.55 million.

Lisa

Retail Sales in 2010 Forecase to exceed 15T Yuan

China is expected to record a 20 percent year-on-year increase in retail sales to more than 15 trillion yuan in 2010, reported by China Securities Journal, citing the 2010 Commercial Blue Book published by the Chinese Academy of Social Sciences.

According to the report, it took six years for China to increase retail sales from five trillion yuan in 2003 to 10 trillion yuan in 2008. 

Pay attention to: it’s only in retail sales, how about the other sectors? We will see…

Lisa

ZTE Produces 200 Millionth Phone

ZTE produced its 200 millionth mobile phone on May 17, do you believe it? It took six years for  ZTE to reach 100 million mobile phones but only two years to produce the next 100 million. ZTE sold 60 million mobile phones in 2009, increasing 33 percent year-on-year, according to data from market research institute iSuppli. ZTE has become the fifth largest mobile phone supplier in the world.

ZTE's mobile phone strategy is to provide customized mobile phones with operators. At present, 70 percent to 80 percent of mobile phones in South Korea, Japan and Western markets are sold customized by operators. In China, ZTE sold 3 million TD-SCDMA mobile phones in 2009 to be the largest TD-SCDMA terminal supplier in China.

We will see it in the future!

Lisa

China Calls for More Private Capital in New Energy

The State Council in a document released May 13, said that it encourages private investment in alternative energy industries including photovoltaic, wind and geothermal energy sectors.

The State council will support private ownership or partially stake holdings in alternative energy projects in order to advance the development of the industry. The government will open up the energy market and would promote pricing reforms in electricity.

Lisa

China April CPI Up 2.8% YoY

China's consumer price index (CPI) rose 2.8% year-on-year in April 2010, with food prices growing 5.9% year-on-year, according to statistics released May 11 by the National Bureau of Statistics (NBS).

The country's producer price index (PPI) for April 2010 grew 6.8% year-on-year as raw materials, and fuel prices grew 12% on an annual basis.

The country's retail sales totalled RMB 1.15 trillion in April, up 18.5% year-on-year, an increase in pace of 0.5 percentage points from March. Retail sales in the country's urban centers accounted for RMB 998 billion, up 18.9% year-on-year.

In previous report, the State Council expected that CPI and PPI for the second quarter would reach 4.2% and 7% year-on-year growth, respectively. First quarter CPI and PPI rose 2.2% and 5.2% year-on-year, respectively, according to the report in April.

Lisa

 

Unicom Q1 Bottom Line Slumps 70% YoY

China Unicom made net profit of RMB 1.13 billion in the first quarter of 2010, down 68.3% year-on-year. The telecom carrier reported revenues for the quarter of RMB 40.42 billion, or RMB 40.34 billion after adjusting for the effect of deferred upfront connection fees, representing an annual increase of 6.8%. The company's mobile services generated RMB 18.63 billion over the quarter, up 11.9% year-on-year, of which 3G business accounted for RMB 1.59 billion, the report said. Average revenue per mobile subscriber (ARPU) per month came to RMB 41.5, the report said. Revenues for broadband services increased 23.8% year-on-year to RMB 7.13 billion, with an ARPU of RMB 59.5.

China Unicom accounted for 26.7% of China's 3G users by the end of March.

Lisa