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Havas Group China September 7Th, 2020

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Havas Group China September 7Th, 2020 EDITION 2020 #9 Havas Group China 1 September 7th, 2020 Register now for September 24th and 25th In this edition Key market developments • Economic outlook • Consumer behavior developments • Key category outlooks • Havas POV China advertising market • Advertising market development • Media consumption update • Media market news • Campaigns worth mentioning • Havas POV 3 Key market developments Economic outlook 4 China continues to have the most confident consumers in the world, as multiple economic factors further rebound Ipsos, Aug research, China Employment Expectation Investment index index index +3.5 vs. last +3.5 vs. last +2.3 vs. last month month month +5.7 vs. Jan 2020 +5.5 vs. Jan 2020 - Source: Ipsos 5 Both online and offline retail are showing promising signs of further business growth EC platforms had their largest quarter sales in Q2 # of new stores opened since June • Tmall sold 27% more worth of goods than the same period last year • Cross border platform Tmall Global was up 40%. 188 173 • JD's sales increased 47.4% • Pinduoduo climbed 67%, with an extra 81.4 In Beijing including 96 In Shanghai including million monthly active users on its platform eateries/cafes 69 eateries/cafes since March. 192 128 In Shenzhen including In Guangzhou including 60 eateries/cafes 84 eateries/cafes Source: China skinny 6 With more festivals (like Chinese Valentine’s day) turning into major shopping events Besides marketing to couples, brands also focusing on single people with the rise of China’s single economy Sale increase from Y2019 same 118% period in Tmall & Taobao, with the peak a week prior to the festival Tmall launched a ‘cheers to sourness’ campaign Hotel reservation vs. pior 40% week on Qunar Cinema patronage recovered 90% vs. Y2019 same period Rio ‘happily drink alone at home’ campaign Source: China skinny 7 China 6G is on the way, making the country even more competitive in the next decades China has officially launched research and development work for its 6G mobile networks with speed up to 1 Terabyte per second 6G will be fully integrated with holograms. You won’t have to keep looking at your phone; there will be a 3D holographic map projected in front of your eyes. “6G, together with other technology areas such as artificial intelligence and quantum computing, will be at the center of the great power competition with China in the next decades.” — Greg Austin, leader of international Institute for Strategic Studies Source: CBNC 8 Key market developments Consumer behavior developments 9 Shifting the focus from work to family, more and more people will spend more time to bond with the important ones Chinese consumer think it is important to Chinese consumer claim they will take spend time to bond with important ones action to bond with important ones (family, lovers, friends, etc.) Source: Kantar, 6.24-7.5 10 Meanwhile, consumers started putting more effort on self improvement while being less sensitive on money Consumers value change (Kantar, research date 2020 6.15-7.5) 2020 Q2 vs. 2020 Q1 2020 Q2 vs. 2019 Statement (ranking change) (ranking change) Learning new things +6 +2 Agility to new changes +3 +3 Diversity: get touch with people who +7 +2 have different background Cost saving -2 -6 Have abundant of money - -13 Source: Kantar, 6.24-7.5 11 “Clean plates” policy against food waste: to reshape China’s tradition of hospitality and Mukbang live streaming industry Aug 11th, President Xi has called on the Chinese people to stop wasting food. It might reshape China’s tradition of hospitality. Chinese livestream platforms asked to curb shows encouraging food waste. Reform on menu, offering smaller Video platforms start to ban plate, encourage to order N-1 amount Mukbang live streaming China inflation rose 2.7% in July, driven by higher food costs: China's food prices rose 13.2% in the year to July, with pork up 87.5%, not helped by floods and disrupted agricultural production Source: South China morning post 12 Young consumer’s interest to protect nature is growing Willing to pay more for sustainability products (%) 60%+ of Chinese Indonesia GenZ express their willingness China to protect nature Thailand Australia Japan Korea Gen X Gen Y Gen Z Source: McKinsey 13 And they show less price sensitive during live streaming, focusing on the products and KOLs they like Post 80s & 90s are the main Younger live streaming consumers groups in live streaming cares more about the category and KOL Source: ecommerceTOChina – China E-commerce live streaming analysis report 2020 14 Male cosmetic market is growing, more brands are launching specific products for men Male cosmetic market sales estimation (billion) Chanel launched its male cosmetic line in China in Aug 2.5 2 1.5 1 0.5 US biggest pharmacy announced to launch male 0 2016 2019E 2020E cosmetics Top 3 male cosmetics in Taobao 1. Foundation As other cosmetic brands offer male product lines 2. Concealer 3. Eyeliner Source: Euromonitor, Taobao 15 Key market developments Key categories outlook 16 Luxury and Lifestyle 17 Luxury retailers keep things new and fresh by rolling out pop-up stores aligned with festivals and trending themes Luxury brands are using pop-up stores to launch new concepts and show off their omnichannel capabilities in the China market, to win over Chinese millennials Bottega Veneta’s invisible pop-up store Dior’s pop-up shop and influencers Burberry delighted shoppers with its unique intrigued and impressed consumers celebrate love in time for the Qixi Festival Animal Kingdom-themed pop-up and AR tech Source: WWD 18 Chinese shopping malls distribute coupons in creative ways for Chinese Valentine’s Day Coupon delivery in creative picture Creative layout by combining social hot spots 2020 Chinese Valentine’s day seems to be more treasurable for pandemic outbreak. Shopping malls tend to be bolder to deliver love information in form of promotion information delivery and social hot spots 19 Qixi-cases show that not all brands are successful in localizing their Chinese activations Qixi, the Chinese Valentine’s day, is one of the biggest sales driving Chinese holidays for luxury brands. Brands are making lots of efforts for Qixi, with mixed results. Dolce & Gabbana, a company that was already on thin ice with Chinese consumers due to prior missteps, debuted what it called an exclusive Qixi collection, but the products are available globally and have no actual connection to Qixi beyond the way they were marketed. Exclusive, Qixi- themed collections are something Chinese consumers expect, and failing to offer that, especially with misleading marketing, led to immediate scorn on Chinese social media apps like WeChat and Weibo. Balenciaga also made a misstep with a campaign for a Qixi-themed bag. It was widely mocked on Weibo for its bizarre visual style and poor production quality. Some users negatively compared it to the slick campaigns the brand runs in Europe, calling the campaign insulting and misguided. Source: glossy. 2020.08.25 20 Travel & Tourism 21 In China domestic travel recovered to almost pre-COVID level China travel industry recovery situation China is one of the countries want to travel domestically most, while least on international travel 100% 98% 100% 2% Domestic Domestic International International travel pre- travel Aug travel pre- travel Aug covid covid Source: Ipsos, July 2020; Chinaskinny 22 Private group travel and custom travel have become unexpectedly leading the recovery of tourism industry In July China announced that cross-province group travel can resume as of July 30. Since then, data from Ctrip shows that the number of bookings of vacation products, such as air tickets, hotels, group tours and flight-and-hotel packages is rising. Especially, private group tour and high-end customized tour have become the bellwether of recovery. • More than 70% of people choose group travel. • The private group tour has risen to 25%, compared with 9 % in the same period of last year. • The demand for high-end tailor-made travel on Ctrip platform has increased by 125% YOY. Source: Ctrip The Popularity report: Cross-province group tourism resumes in China 23 Hubei scenic spots issued free ticket policy from Aug 8 to Dec 31 The travel industry in Wuhan is rebounding strong • Nearly 4.68 million people booked in A-level scenic spots in eight days, and 40% of the group tours come from other provinces. • The occupancy rate of star hotels in Wuhan is increasing, in central Wuhan the occupancy rate of star hotels and resorts hotels reaching 80% to 90% of the same period last year. On one hand, the Free Ticket Policy in Hubei province reflects their appreciation to people across the country. On the other hand, it boosts demand for travel across Hubei and provides a variety of business driving impulses for restaurants, hotels, shopping, entertainment, transportation and other relative industries. 24 Food & Beverage 25 Consumers show an appetite for meal replacement Amid rapid economic development and increased awareness of healthy eating, the meal replacement market has grown at an annual rate of more than 30% in recent years. The market is expected to hit ¥120 billion ($17.5 billion) in China by 2022. 22% of consumers spend more than ¥1,000 ($146) a year on food replacements - more than 60% of them take meal replacements at least once a week, and some 20% do so once a day. Global brands have taken the lion's share of the Chinese market. About 50% of consumers in China bought "healthy eating products" over the past year, with those born in the 1990s showing increased awareness of this market. Consumers' increased health awareness, along with a range of demands, including weight loss, muscle enhancement, eating healthily and looking young, have fast-tracked this market.
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