Millions of Chinese people across the world are celebrating the Chinese New Year today.
It is the beginning of a new year on the traditional Chinese calendar and is the most important holiday of the year. Each year has a name associated with the 12-year cycle of the Chinese Zodiac: 2019 is the "Year of the Pig."
China has been in the news a lot more in the past year due to Trump’s trade wars, problems for Huawei, population surveillance and slowing growth.
Regardless of what is going on at a geopolitical level, for regular visitors to China like myself, taking a deeper look at what’s going on away from the headlines can help marketers understand how trends in China are going to eventually affect us all.
As Peter Frankopan, Oxford historian and author of the book The New Silk Roads, writes: "All roads used to lead to Rome, today they lead to Beijing."
Let’s examine four insights about China that - given the scale and importance of the market - will eventually impact the rest of the world.
Mobile-only
China, like many other developing markets, did not follow the pattern in the West of going from travel agent to PC to laptop to smartphone as its channel to book travel.
Many consumers just went straight to the smartphone and have never engaged directly with a browser. Mobile is ubiquitous in China - it's a way of life, not only a medium of communication.
And this is before we start talking about the apps that are available.
Already, Chinese travelers are ranked among the top spenders on a per-trip basis. Their preferences are rapidly shifting towards long-haul travel, higher cost accommodation and upscale shopping.
Kieron Branagan - OpenJaw Technologies
To understand mobile in China, you have to understand the influence that Tencent and Alibaba have in the country. The vast majority of online activity in China happens through proprietary applications run by Tencent and Alibaba – and nearly all this is done by phone.
Alibaba’s online payments system, Alipay, controls about half of China’s online payment market. Aside from Alibaba.com, Alibaba also has its Tmall marketplace for business-to-consumer and the Taobao marketplace for consumer-to-consumer.
Combine eBay, PayPal and Amazon and you get an understanding of Alibaba’s brand portfolio.
Tencent owns WeChat, which has more than one billion users, an incredible combination of Facebook, Twitter, Spotify, WhatsApp, PayPal and YouTube, mixed with UberEats, Instagram, Expedia, Skype – all in one "super-app."
WeChat was recently called the "operating system of China."
The question asked in the West is: What is our strategy for mobile? In China, mobile is the strategy.
E-commerce centricity
Brands are not just purveyors of products and services; they're partners helping consumers with daily living.
Most Chinese companies have recognized this and build their advertising and marketing, social communication, shopping, purchasing and payment programs around mobile.
You can use your phone for literally everything, to talk, text, shop, hail taxis, book travel, trade stocks, pay for utilities, deposit money into a bank or transfer money.
As a result, China is now entering the next phase of e-commerce: Digital shopping is the norm for Chinese consumers.
The e-commerce paradigm has shifted to brands and platforms that offer a complete brand experience rather than a narrow focus on sales and, as a result, many Chinese brands are doing things that are yet to be seen in the West.
These include integrating experiences across all touch points and channels to create a seamless and immersive experience, often leveraging virtual reality and 3D imaging to build continuous engagement along the entire consumer journey.
Friction-free living
China previews a future of "frictionless living" – and consumers expect things to be done at the touch of a button.
From a pure payment perspective, WeChat and Alibaba’s Alipay are making cash obsolete. On a recent trip to Dalian in northeast China, I found it difficult to pay cash even in modern supermarkets and convenience stores.
The e-commerce paradigm has shifted to brands and platforms that offer a complete brand experience rather than a narrow focus on sales and, as a result, many Chinese brands are doing things that are yet to be seen in the West.
Kieron Branagan - OpenJaw Technologies
As Duncan Clark, venture capitalist and author of the definitive biography on Alibaba's founder, Jack Ma, and longtime resident of Beijing, writes: "I feel on returning to London or Silicon Valley that I’m going backwards in time."
And the thinking about convenience has extended beyond just payment. Ma coined the phrase “new retail“ to explain the company's vision of blurring boundaries between the online and offline shopping world.
The company put this into action with the purchase of the Hema supermarket chain. Each of the 50 Hema grocery locations can deliver within 30 minutes.
All the aisles have interactive, digital screens to give customers product information, show similar products and show what the most popular items in the aisle are (even by age group).
Prices on the screen can be changed via Wi-Fi – including products such as seafood, where prices are determined by supply and demand. If you want, each store will even cook the food you buy at one of the in-store restaurants.
And, of course, there is automated checkout that recognizes each product and accepts Alipay.
Travel trends
China is becoming the largest source market for international travel and overtook the United States as the largest source market in 2014.
The income growth and expansion of China’s middle class makes long-haul travel more achievable. The rapid expansion of airlines such as Hainan Airlines on the international stage makes the Chinese traveler more accessible to new experiences.
Already, Chinese travelers are ranked among the top spenders on a per-trip basis. Their preferences are rapidly shifting towards long-haul travel, higher cost accommodation and upscale shopping.
Cities are the primary attraction for Chinese outbound travelers. Nearly 92% of total Chinese outbound travel spending is received by major global cities.
This has ramifications for hotels and retailers welcoming Chinese tourists: Nearly all Chinese travel brands and, indeed, Western travel brands with services to China already enable their customers to transact through WeChat (the user simply scans the brand’s QR code and then follows the brand).
To book a flight, simply go to the airline's app within WeChat. To receive customer service, again use WeChat to send a voice or text message to an agent in a call center detailing your request.
What about when you arrive into your hotel room? Simply scan the unique QR code in the room and use the in-room app on your mobile phone to control the temperature, lighting or room service (payable through WeChat Pay, of course).
And, finally, we must mention the power of Ctrip and online travel agents in China. OTAs are the number one distribution channel in China, with airline direct bookings having a much smaller share.
Ctrip has a market share of 60% of the online travel industry in China and is the world’s second-largest online travel agent after Booking Holdings.
Ctrip bought flight comparison site Skyscanner in 2016 and operates in the U.S. as Trip.com. Alibaba and Tencent have also invested in the travel market, with Alibaba’s travel unit Fliggy chipping away at Ctrip’s share in flight sales and Tencent-backed Meituan Travel beating Ctrip in hotel bookings by volume last year in 2018.
Finally, one thing you might have heard about is slowing growth in the Chinese economy and how Trump’s trade wars mean that China is going through a downturn.
A look at the percentages about China annual growth is interesting compared to the U.K. In 2018, retail sales growth was 6.9%, compared with an increase of 9% in 2017. Not exactly a crisis!
So, "Happiness and Prosperity" to you for the Year of the Pig. Or if you want to practice your Chinese Mandarin, 恭喜发财 (pronounced gong-ssheefaa-tseye), or Cantonese, 恭喜發財 (pronounced gong-heyfaa-choi).