This week in the news, China’s internet population reaches 649 million, a new line of resorts is set to offer a unique travel and retail experience, gifting is down 30 percent among China’s wealthy, the popularity of whiskey is rising in Asia, and Daimler downplays concerns over China’s luxury auto market.
With China’s booming e-commerce market, China’s internet population reached 649 million at the end of 2014 with 557 million Chinese accessing the internet on their mobile device. However, growth is slowing. The data from the China Internet Network Information Center (CNNIC) showed that, in 2013, China added 53.58 million new internet users, whereas in 2014, only 31.17 million users were added in the country. Growth in mobile internet users has been faster, as China added 57 million new internet users last year to reach 557 million, making up 86 percent of the internet population. The overall slowing growth in new internet users can be attributed to the divide between urban and rural Chinese.
A new line of resorts is set to offer China’s rising middle class a unique travel and retail experience. Jihua Parks will open the first of their destination centers at the end of the year. Geared toward activity sports but also encompassing the shopping, hospitality, and entertainment sectors, the parks are designed as leisure destinations for middle-class travelers, and will give them the chance to purchase international brands not easily obtained in China. Each of the two parks expected to open in 2015 cost $200 million each, and will be located in Chongqing and Changchun. The resorts are being developed by China’s Jihua Group, a company with a $4.3 billion turnover that expects to open 35 of such leisure destination centers over the next decade.
Overall spending on gifts has decreased by 30 percent over the past two years. Tech products are also becoming more popular choices for gifting than the fashion brands that dominated the sector in the past. American tech giant Apple, for instance, is experiencing tremendous growth in China, with a 70 percent revenue growth in the country during the last quarter and another surge anticipated as consumers begin to purchase gifts for the Chinese New Year. The Hurun Research Institute’s Chinese Luxury Consumer Survey 2015 found that both men and women consider Apple to be the number-one brand for gifting. Apple’s competitor Samsung also made the top 10.
A growing interest in whiskies among Asian consumers is spreading to China. This trend is encouraging high-end whiskey manufacturers to step up their marketing strategies on the continent, and China is one of their prime targets. Scotch maker Johnnie Walker is now opening a line of “Johnnie Walker Houses,” boutiques dedicated to educating consumers about the brand. Accompanying them is a new digital campaign: “Johnnie Walker House — World of Privilege,” an Asia-centric membership rewards program designed to attract consumers through social media. There are currently Johnnie Walker Houses in the Taoyuan International Airport in Taiwan, Beijing, Chengdu, and Shanghai. More outposts are on their way.
With luxury spending set to slow in China, Germany’s luxury car makers are concerned about China’s auto market, but Daimler remains optimistic. Speaking at a special media event at the 2015 North American International Auto Show in Detroit before unveiling the Mercedes-Benz GLE Coupe, Daimler CEO Dieter Zetsche said, “I’m not seeing that brutal slowdown of growth. I see a pretty stable economic development.” He also noted that sales of the S-Class and E-Class remained strong in the country. IHS Automotive expects China’s luxury car market’s growth rate to slow to 5 percent by 2018, down from an average growth rate of 30 percent over the last decade.
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