Matthieu David: Hello everyone, today we are going to look into the beauty sector in China, and the report we published a few days ago, maybe two weeks ago about how Covid-19 impacted the beauty sector in China. How it impacted during the epidemic and after the epidemic. I’m here to talk about the report with Allison Malmsten who has worked on the report and we will like to share today with the audience a few conclusions we had on the report, especially Alison you mentioned, an overview of the beauty sector before Covid-19 and some of the trends which came out of this and which were a change in the sector. What kind of changes and differences did you see before Covid-19 and just after Covid-19 in China.

Allison Malmsten: Right, hi – so I am Allison, one of the marketing managers at Daxue Consulting. So, first, China’s beauty market is by no means small, it’s the second-largest in the world at over 300 billion renminbi in annual revenue. Skincare taken 54% of the beauty sector in China and some trends that we saw before Covid-19 were – 1] the high-end segment was growing proportionately faster, so high-end brand segment was growing at 18% year on year while the mass brands were only growing at 5% year on year. 2] Second is that social commerce is blossoming, this is Xiaohongshu and also WeChat has its own platform called 有赞 (youzan) and what we saw is on these platforms, especially for the beauty sector in China the conversion rate is pretty high, and so this is kind of a new way of shopping and the year on year growth for Xiaohongshu was double in 2019. Lastly, there’s a rising preference for a domestic brand. Looking at the top 20 beauty brands in China, in 2012 only 7.6% of them were Chinese while in 2018 14% of the top 20 beauty brands in China were domestic Chinese brands, so this growth is pretty significant.

Matthieu David: Very interesting, it seems that the Covid-19 accelerated some trends which were already happening before such as social commerce, Xiaohongshu being one example, that’s what existed before, and the epidemic was let’s say a time where people had more time to spend online and to do social commerce. Do you have the same analysis at the trend that is not necessarily new, whether they have been accelerated with Covid-19?

Allison Malmsten: Right so out of the three trends I mentioned, yes, the social commerce is definitely even more significant now because obviously during the pandemic people were less willing to go to offline stores and they were doing more live stream shopping and more shopping on Xiaohongshu and KOL marketing is definitely very important during this time. There is one trend that might take a turn and that is the high-end segment was growing very fast before and we might see the slowdown as people will be preferred – they’ll be looking more at ingredients and less at brand names, so this could give a chance to any brands that focus on natural ingredients and focus on skin health and skin repair.

Matthieu David: Very interesting to see indeed, in the report we mentioned that Chinese consumers online were looking at the ingredients and at the quality of the beauty product they were buying, more than before and I think within the report we found out that not all the categories went up and for instance make up went down if my memory is correct and specifically some beauty products and financing on natural ingredients grew faster.

Allison Malmsten: Yeah so, cosmetics were hit the hardest. A McKinsey survey showed that 44% of respondents purchased less make up, while 31% purchased less skincare but then also 25% of people purchased more skin care so it’s kind of balanced out but yeah and then within makeup, obviously lipstick pretty much because everybody is wearing a mask, so there’s a beauty style now called the ko [inaudible 05:00] its makeup for wearing masks, so the focus is really on the eyes and also the skin and so the skin care sector, it did take a bit of a hit but it’s also doing pretty okay and a lot of the focus when people are at home – our social listening showed that a lot of people are talking about its time to be at home and they’re wearing less makeup so they see that their skin is getting healthier so they’re very excited about those results and it inspires them to purchase more skincare products, while at the same time wearing a mask for a long time can be very damaging to the skin, so a lot of people are searching for products that have skincare repair functions and also skin sensitivity is a big keyword now. A lot of people are finding that they have sensitive skin and they’re looking for skincare products that can help repair their skin damage from wearing a mask including anything like natural ingredients are really popular right now.

Matthieu David: And some of the comments we found online through social listening were saying that people were switching from makeup to skincare instead of putting makeup to take more care about their skin with specific products, I would say more natural products. I’d like to go back on the Chinese brands – you mentioned that Chinese brands took off during the Covid-19 lockdown and after the Covid-19. Do you see here long-term trend or it’s just short term and was during the epidemic, or do you see a substantial change which is going to stay?

Allison Malmsten: I think that this is going to – the preference for domestic brands, I think this is going to be a long-term trend. I think this is a trend that was accelerated from Covid-19 and the reasons are 1] because patriotism is a very high right now in general, 2] because also domestic brands really understand Chinese consumers and they understand how to reach them. They’re usually very proactive about social commerce and also, they are familiar with like some Chinese herbal ingredients that are very in right now and so they include those in their ingredient list and yeah, I think that a lot of Chinese brands are gaining momentum right now.

Matthieu David: And we looked into a very specific brand called Perfect Diary in the past and it’s a very, very Chinese company which is doing very well. In a topic, we’d actually like to talk about which is product traffic and Perfect Diary has been an example of being very good at product traffic. Product traffic being something very specific to china where e-commerce started with marketplaces like Taobao and then Tmall and then JingDong and many other marketplaces where having your own website and selling through your own website was not mainstream and now its becoming more the case – not selling through your own website, but your website, your WeChat groups, your WeChat channels and your live streaming. So, using a marketing platform to convert on your own asset, your own digital asset, and not through a marketplace. What did you see in terms of digital changes during the pandemic and after?

Allison Malmsten: So, I saw some digital changes, one like you mentioned private traffic and then two is also live streaming. Live stream obviously ballooned under lockdown, while everybody was at home they spent more time on their phone and inevitably they spent a lot of time shopping on their phone or looking at products and so some statistic for that was that as of February 18th, the monthly number of live streaming events on Taobao ballooned by a 110% year on year. Also, Douyin, also experienced around 70 to 100% growth during the lockdown period, so a lot of brands are using live streaming now. And then also one case, in particular, is [inaudible 09:10] which is an Australian beauty brand, during the coronavirus they directed its offline stores to all sell on WeChat, so that is over a 1000 stores that would normally have offline sales, offline staff, they all went online during that period and they actually had sales of 6.3 million renminbi during a live stream event that happened during the coronavirus lockdown in china.

Matthieu David: I believe that the next step is to see those trends now continuing or if it was just a short-term trend during and after the pandemic.

Allison Malmsten: Right, yes that will be very interesting to see because once stores open up, I’m sure people are very eager to go out shopping again but at the same time they might be a little bit more cautious to hit the stores.

Matthieu David: Thank you, everyone, for listening and we will continue with new reports, we will go through together online.

Find the full beauty sector in China Report 

This article Market Tidbits transcript #1: Major changes in the beauty sector in China after COVID-19 is the first one to appear on Daxue Consulting - Market Research China.

China is the second largest cosmetics market in Asia and the fifth in the world. It has been a profitable paradise for foreign cosmetics brands for a long time. Foreign cosmetics brands in China own around 70% of the market. In 2018, P&G and L’Oreal had the biggest market share in China, with 25.8% and 21.5% accordingly. The American Procter & Gamble, the French L’Oreal, The Japanese Shiseido, the Anglo-Dutch Unilever and the American Estee Lauder are the key players in China’s cosmetic market.

Data Source: qianzhan, China’s cosmetic market share 2018 (foreign brands)

Chinese consumers’ behavior is evolving very quickly, due to the huge economic growth. Hence, the middle-class in China are more sensitive to their life quality and health-awareness. Therefore Chinese consumers have been more interested in using overseas products which have a long history and more refined products.

Marketing strategies of foreign cosmetics brands in China

L’Oreal is a huge success among foreign cosmetics brands in China

L’Oreal shows rapid growth in Chinese e-commerce

The French brand has grown ten-fold on e-commerce since 2011. It is the leader on e-commerce in China, which is the fastest growing channel for L’Oreal. In 2020 e-commerce already makes up 50% of L’Oreal’s China sales.

Data Source: L’Oreal Group Annual Reports, Percentage of Loreal China sales from e-commerce

The next step for L’Oreal is new retail: the combination of the offline and online channels. It includes such technologies as augmented reality, virtual reality, and artificial intelligence. Today L’Oreal in China already provides skincare diagnostic supported by artificial intelligence for Vichy on Tmall.

Foreign cosmetics brands actively use KOLs in such online platforms as WeChat and Weibo. For example, many celebrities like Li Gong, Zhilei Xin (Famous Chinese actresses) promote L’Oreal cosmetics among Weibo users. 

Personalization and co-branding are the key cosmetics marketing strategy in China for L’Oreal

More and more companies focus on offering personalized experiences for their customers. To create a more customized digital experience, L’Oreal has integrated technology to let people “try on” lipsticks by pointing their smartphone camera at themselves. The L’Oreal-owned Giorgio Armani make-up brand became the first luxury line to use the technology on WeChat. WeChat users can order them from Giorgio Armani Beauty’s mini-program shopping site. Users also can screenshot, save and share images as well as view before and after images to elevate the consumer shopping experience. 

Source: Cosmetic Design Asia, Loreal Group has launched of its Augmented Reality (AR) make-up try-on application ModiFace in China

L’Oreal’s quick rebound after COVID-19

The French brand reported that its China sales have seen signs of recovery since the COVID-19 outbreak. Despite overall sales for the quarter shrinking globally, L’Oreal China achieved high growth in March 2020. The CEO of L’Oreal Group, Jean-Paul Agon highlighted that the company’s performance in China was “remarkable”.​ “China was able to close the quarter at plus 6% which is pretty amazing when you think about the difficulty that they had due to the pandemic.”​ L’Oreal China recovered quickly due the early restoration of operation and wide usage of the online-to-offline model. Additionally, during the Women’s Day Festival on March 8^th, 2020, L’Oreal group launched an online shopping event in China to trigger sales.

In March 2020 sales of L’Oreal Group in China became positive again. That proves that using of online-to-offline model and social networks promotion were successful marketing strategies for L’Oreal in China, and especially boosted their sales through the tail end of the pandemic.

Estée Lauder tops the list of 100 most prestigious cosmetics brands in China

Estée Lauder targets young Chinese millennials

The beauty brand targets young millennials to tap into China’s booming cosmetics and personal care industry. Its shift away from older consumers is part of its long-term investment strategy in the country. Estée Lauder’s cosmetics marketing strategy in China is to position itself as millennial-focused. It quickly identified that tapping into the high spending ability of young Chinese consumers with specialized luxury lines is essential for its success.

To gain a clear, competitive edge over its rivals, it redesigned its marketing campaigns. For example, Estee Lauder in China increased digital engagement, leveraged social media platforms such as WeChat and Weibo. Additionally, like many other foreign cosmetics brands, it collaborated with the local celebrities.

Estee Lauder focuses on digital strategy

E-commerce in China has developed rapidly and is a popular way to shop for most Chinese. Thus, it took a specialized online strategy to adapt to the Chinese market. E-commerce represents approximately 30% of Estée Lauder’s business in its top markets. In 2014, the brand became one of the first high-end cosmetics brands to enter Tmall. They built a professional team with 50 persons to focus on the brand’s Tmall store and independent e-commerce shop. In 2017, the sales revenue of Estee Lauder Group in China had 40 percent growth. Notably, e-commerce accounted for 50 percent of that increase. Also, as a part of its cosmetics marketing strategy in China, Estee Lauder opened online stores for its sub-brands. It helped to bring more consumption to the Group.

Data Source: WalkTheChat Analysis, Evolution of Tmall flagship sales between March 2019 and March 2020

KOLs and special products push the sales of Estee Lauder in China

Estee Lauder invests heavily in digital marketing, social media, and KOLs. For example, Yang Mi, a famous actress in China, is Estee Lauder’s brand ambassador. Her first cooperation with Estee Lauder in February 2017 earned over one million shares on Weibo and brought over 500 percent more sales. Meanwhile, some popular KOLs in China helped to increase consumption. In 2019’s double 11 presales, Chinese actress Li Jiaqi sold over 0.4 million Estee Lauder’s Advanced Night Repair in a short time.

Estee Lauder’s matrix covers almost all categories of cosmetic products and price ranges, reducing the risk that customers switch brands as their preferences evolve. Notably, Estee Lauder Group launched a brand called Osiao in Hong Kong in mid-October, 2012. This brand is specially designed for the skin of Asian people.

P&G’s cosmetics marketing strategy in China highlights premium innovation and product mix

P&G launches a premium skincare brand in China

Unlike other top foreign cosmetics brands in China, Procter & Gamble (P&G) decided to put focus on the premium segment. In 2019 this American company brought a premium skincare brand called Oriental Therapy to the Chinese market. Chinese herbal medicine inspired the company to create this cosmetic line.

What makes it especially unique is that it meets skin’s different needs during the four seasons. According to Oriental Therapy’s Weibo post, the beauty line focuses especially on Chinese women.  The brand is now available via Tmall, WeChat, and Xiaohongshu shopping platforms. P&G believes that Oriental Therapy will fill the gap P&G has in its beauty offering in China. One of its key products, Springtime Hydrating Essence costs 450 RMB or 65 USD. The brand’s skin-care sets cost between 740 and 1140 RMB, or 107 to 165 USD.

Source: Weibo, Premium skin-care brand Oriental Therapy for China

However, P&G faces a lot of competition among foreign cosmetics brands. For example, companies like Estee Lauder and Shiseido are also upping the ante through launching new brands including DARPHIN and D-Program.

P&G uses Alibaba to sell in China

To expand its e-commerce P&G has turned to Alibaba Group, which operates the country’s largest online marketplaces. Alibaba also offers digital marketing solutions and access to a huge audience via its media ecosystem, including  Alibaba-related companies such as video-streaming site Youku and the Twitter-like Weibo microblogging site.

“E-commerce also plays a significant role in brand building, which is changing P&G’s century-long brand-building model.” – says Jasmine Xu, the company’s vice president for Greater China e-business and branding. Oriental Therapy has also opened a flagship store on Tmall, where it offers products in different combinations.

China is the second biggest market for Shiseido

Shiseido adopts cooperative cosmetics marketing strategy in China

In 2020 the Shiseido Group opened its first Beauty Innovation Hub outside of Japan at its flagship space in Shanghai.  Shiseido Beauty Innovation Hub represents a new way of working to drive consumer-centric solutions in China. At this space, Shiseido plans to collaborate with Chinese startups and disrupters, and create innovation which will deliver true value. Cooperation and localization, rather than head-on confrontation, is the strategy Shiseido takes. The Beauty Innovation Hub aims to work with local startups in the extended beauty space. On top of this, Shiseido in China plans to experiment and create new businesses. The hub serves as an open innovation platform for Chinese startups, opinion leaders, area experts, media and scientists.

Source: Medium.com, Shiseido Beauty Innovation Hub in Shanghai

Shiseido in China joins Tmall to promote online sales

In 2018, Shiseido revealed their New Retail strategy. A part of this strategy is a platform they developed called the “Shiseido Official Beauty Star Product Hall”.

In 2019, Shiseido signed a partnership with Tmall. It helped to develop new products based on what Chinese consumers are searching for on Tmall. The first co-developed products, a ‘mild and refreshing scalp shampoo’ and an ‘essence oil for split ends’ will launch on Tmall under Shiseido’s hair and body care brand Aquair. Shiseido said it expects e-commerce to generate 40% of its China sales by 2020.

“Without a doubt, whether it be e-commerce or digital innovation, Alibaba is the leader. Alibaba is one of the most important strategic partners for Shiseido China as well as for the entire group,” said Fujiwara, Shiseido’s CEO.

Data Source: Shiseido Annual Reports, Percentage of Shiseido China sales from e-commerce

Mary Kay uses scientific innovation in China

Mary Kay China targets young consumers

As Chinese consumers are more and more informed about beauty, Mary Kay is facing the challenge of developing interesting products. “In China​, beauty consumers demand for products and services are constantly increasing.

The current consumer trend of skin rejuvenation in China is strengthening, and the purchasing power of the 18 to 24 age group is rising,” said Katherine Weng, general manager of Mary Kay China. To cater to younger consumers, the company’s cosmetics marketing strategy in China is to create “bold and interesting” ​products. In 2019, it launched Pink Young brand in China. As company claims, “It’s the answer for today’s woman who wants to show her femininity along with her fierceness.”

In 2018, the company invested around $50 million in the Mary Kay Science and Technology Center, located in Shanghai. Additionally, the company sees the need to increase its online presence. It has launched a new channel which enables consumers to use WeChat to place orders with independent beauty consultants.

Mary Kay focuses on direct sales in China

Mary Kay is one of the world’s biggest direct selling enterprises of skin care products and cosmetics. Within a short time, Mary Kay China established its name among Chinese consumers and experienced steady growth in the country’s first-tier cities. Now, it has set up 35 branch offices across the country. When the company first began expanding beyond China’s big cities, its direct-sales model was new to consumers in China’s second- and third-tier cities.

Mary Kay has three key strategies. First, it drew up strict rules on how beauty consultants should conduct themselves and present Mary Kay products. Second, it developed advertising campaigns in a variety of regional print and broadcast media. Third, the management team established special training programs for consultants.

The sales force represents a competitive advantage. Consultants know their customers well. Such personal networks are vital because Chinese consumers tend to trust people with whom they have a good relationship. Their close relationships with relatives and friends would ease making follow-up visits to get feedback and introduce new products.

Summary of the marketing strategies of foreign cosmetics brands in China

Co-branding

Not many foreign cosmetics brands use co-branding as a key strategy. Co-branding helps brands “exchange” customers, and effectively expand their consumer base. As competition in the Chinese cosmetics market is fierce, such giants as L’Oreal or P&G have not shown interested in involving other brands for cooperation. Shiseido has another approach. It has its Innovation Center in Japan, where it also cooperates with other local brands. Thus, cooperation with the Chinese start-ups was a natural marketing strategy for this company.

KOL marketing

KOLs are popular social media users who can influence a wide audience. In China they usually post on WeChat or Weibo, but other platforms like Xiaohongshu can be considered depending on the target audience. Many foreign brands cooperate with them to expand their audience, especially among millennials. To gain new consumers and increase sales, L’Oreal and Estee Lauder chose this cosmetics marketing strategy in China.

Direct sales

Direct sales are a traditional channel for all foreign brands in China. However, as of 2020 most brands consider e-commerce as a key sphere for development. During the COVID-19 outbreak direct sales showed its vulnerability. Mary Kay is the brand which always had its special strategy of creating personal relations between beauty consultants and customers. Nevertheless, now Mary Kay in China is also considering using digital technologies to promote its products.

E-commerce

The target audience in the cosmetics industry is the post-80’s and post-90’s generations. They always keep up with the latest trends and care a lot about their appearance. One of the most effective ways to approach them is to find where they spend most of their time: online platforms and social networks. Most foreign brands widely use online methods to expand their influence in the Chinese cosmetics market.

Special products

Some foreign brands focus on a special approach to the Chinese market. They create products and sub-brands oriented on the Asian audience. It could be skincare products created specifically for Asian skin or inspired by the Chinese traditional medicine. That helps to increase customers’ loyalty and increase sales in the Chinese market.

Author: Valeriia Mikhailova

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This article Marketing strategies of foreign cosmetics brands in China is the first one to appear on Daxue Consulting - Market Research China.

Full transcript below:

Matthieu David: Hello everyone, I’m Matthieu David, the founder of Daxue consulting and its China marketing podcast, China paradigms and today I am with someone I’m very impressed by when I looked at their resume, Dr. Renata Thiébaut. You are a partner and head of the business intelligence of Web2Asia since 2013. On the side, you’re a researcher at Harvard University and you have a Ph.D. from Jiao Tong University in Law. So that’s why I’m saying that I’ve been very impressed by your resume.

But we are here to talk about Web2Asia. Web2Asia is a TP – so Taobao partner or Alibaba TMall partner agency– you will tell me which formula we need to use, which is an official name for companies that are able to represent companies and sell on their behalf and manage marketing budget and media buying on Alibaba. So, you need to be accepted by Alibaba to get this name to be an Alibaba Tmall partner agency. Size of business, you started in 2006, it’s about 200 people now. You can work in eleven languages and you have worked for companies like Marks & Spencer, Esprit, Bausch, Swarovski, Intersport and one I’m very interested in – Metro, Aldi, and JellyCat which you won a reward for by Alibaba, and I hope that’s something we can talk about. Thanks, Renata, for being with us, and could you tell us more about Web2Asia?

Renata Thiebaut: Thank you Matthieu for welcoming me today. Web2Asia is a full e-commerce service provider in China, so we have three different core services. The first one is the market entry strategy for foreign brands that want to open an online shop in China. The second service is the e-commerce operations in China and sales. As you said, we have around 200 staff that take care of the design of the shop, also customer service and company preparations. So, we have the whole ecosystem to offer to our clients, especially foreign clients that want to come to China. And the last service, as an e-commerce service provider in China, is digital marketing, because it goes hand in hand with e-commerce to leverage the sales.

We’ve been in the market since 2005 and we were doing more marketing at that time. Around 8 years ago we switched to do more e-commerce operations in China and we were one of the first ones to do cross-border e-commerce in China. So, let’s say we have very deep expertise, especially in cross-border e-commerce in China, since the beginning that everything was manual – we need to collect ID cards manually. It was a bit complicated in the beginning but now we narrowed down the whole process. And we’ve been awarded a couple of prizes from Alibaba group. The latest one was with Aldi and we won the innovation prize from ele.me which is Alibaba’s food app, and most of our clients are from Europe, are from North America so we focus more on foreign clients that want to come to China.

Matthieu David: For all the revenues, could you share a bit an idea of number of clients, revenues, some idea of where you are now? 200 people is not small, so I believe you are a sizeable business now.

Renata Thiebaut: Yeah it is very interesting that when we started we had roughly 15 people right, so we had a very start-up mindset and a do it yourself – we had a lot of struggles in the past but because of our positioning as one of the few foreign owned TP’s in China – also our management is all done by foreigners, myself and other partners as well, so we could tackle better different foreign markets, especially Europe right. So, we have many German clients, many British clients because of our background. So, it was a matter of positioning, of having a clear strategy of how to position our business and define where we want to go to, and I think 5 years ago we started growing a lot. Now we have clients either for consulting or e-commerce operations in China and we have more than 30 fixed clients let’s say.

Matthieu David: About 30 clients now you manage operations for?

Renata Thiebaut: Yeah for operations only for TMall but we have other services as well.

Matthieu David: I see, that’s something I’d like to know more about is that you mention a lot TMall, you mention a lot TP – that’s something I’d like to understand if Pinduoduo or WeChat is part of your work as well, but let’s go back – let’s talk about this later. So, what you are doing is to mainly manage – you started in 2003 when Taobao just started. I think TMall was not existing, just to think about it – it was pre-iPhone – the iPhone is 2008. 2003 I think Taobao started, Alibaba was started in 1999 – it was a B2B marketplace and they had no C2C, and Taobao was C2C, then TMall appeared much later (read about setting up a Taobao shop). You seem to talk about the beginning as if you were at the beginning, but I think you joined later. So at the beginning what was the vision? Was it about selling on Taobao which like eBay or like the C2C platform? What was the vision initially?

Renata Thiebaut: Well the vision was purely C2C platform and I was working at that time with Taobao, so I have a Ph.D. in law and I was doing a lot of IT protection, so my role was to shut down all of the stores on Taobao that were selling fake products. So at that time, it was very interesting because there were no rules or regulations to tackle this issue and we had to do everything manually, we had to do mystery shopping and contacting the store to ask them to close. So, my first big client for this type of service was Swarovski. There was a very good finding actually that most of the products were actually not fake. They were original. So, there is a big problem with the supply chain that the factories leak the products. The products are original from the factory.

So, there are many situations like these that China has this problem with in the past, but it has improved a lot. So yeah – at that time Taobao was clearly C2C but now you can even have some brands opening on Taobao, a store on Taobao. Miranda Kerr – the Australian model for example, she opened her brand first on Taobao and then she migrated to TMall Global. So, this is a tendency actually from all of these platforms. They do not only adopt one business model; they try to follow consumers and see the tendencies to shift their business and it happens quite often.

Matthieu David: Initially, so Taobao is a C2C platform that’s maybe where some people would sell products, some Chinese companies would sell products, but at that time in 2003 I don’t believe there were many European and American companies which wanted someone to help to sell on Taobao, so initially when Web2Asia was started – what was the vision? Was it to be a TP? It could not be because it was not even existing. Once TMall was created the word TP emerged. So, what was the vision initially – it was to create websites? To be in the digital space? And then it evolved into a TP? Is this the story?

Renata Thiebaut: Yes, this is the story. At that time, we were doing more websites and more marketing on Baidu for example, and then we had to shift our business model because we saw e-commerce was booming and there would be many opportunities in this industry. So, we became Alibaba certified Tmall Partner agency when e-commerce started in China basically and now, we are one of the top three TP’s from Alibaba, so most of our clients are referred by Alibaba. We have a very close relationship with Alibaba, because they are the marketplace and we do the store operations. So, there is a lot of coordination we have to do on a daily basis.

Matthieu David: So let’s talk about some of the rewards you got from Alibaba – one of them is of course attracting the eyes of everyone, reading your presentation which is JellyCat.  Would you mind sharing a bit more about what you did for them as a case study for those who don’t know JellyCat, it’s a British toy, but in China it seems that what you have done is that you’ve found a different market in China. You a massive amount of the product on TMall, I read in your presentation double digit million USD if it’s correct, within a year I believe, and you have been rewarded by Alibaba for those campaigns’ management of this shop. Would you mind telling us some more about what you did and how it was successful?

Renata Thiebaut: I think JellyCat is our biggest store – biggest successful case actually, because it is a small brand out of the UK and when they started in China back in 2015, they had no awareness in China- yet their price point is a bit higher compared to other local products. So, we had to position ourselves very well to have a very strong storytelling to prove to consumers they should pay around 300 RMB for that instead of 50. So, we used a lot of UK related elements to show the product was premium and to create a storytelling, and the royal family was the theme that we used at that time. We could use also some pictures because some Hollywood actors or actresses, they give JellyCat to their kids, and also the royal family itself, they use JellyCat toys. So, we could use all of this materials to show to consumers that for foreign people and for famous people as well they all love JellyCat.

So, Alibaba created a video for us, we were featured in one of the best case studies of Alibaba group, and the video was very interesting because the story was all of the JellyCat were coming from the UK to visit shanghai. So again, content was the key for JellyCat to be successful here and they have cute products. Chinese culture is a cute culture – so the product is good. Sometimes of course we cannot make miracles if customers do not really like a product or if it’s not suitable for the Chinese market, but JellyCat we could adapt the content, we could create new content, we are very flexible about that. Also every year we launch the animal of the year, that is related to the Chinese zodiac and this is very important, this localisation to the Chinese market. So, within one year we became the top one plush toy in the Chinese market and we keep winning awards for JellyCat, expanding their business here in China, so now they sell on different platforms and also, we are going offline with them. So JellyCat I think for me is the best successful case because it’s a very small company. So, if you have limited budget and if you are not well-known, it’s much more difficult to develop your brand in China, which was the case – so that’s why I like sharing JellyCat’s story.

Matthieu David: And Alibaba like it too – they share it and they gave you a reward. May I summarise and see the key point is that the royal family is using JellyCat, was it the key point? I feel it is something when you have an endorsement from a very famous and very respected people, Chinese would tend to buy it. Second question you said in your presentation that it’s not used as a toy, would you mind sharing then what it’s used for?

Renata Thiebaut: So, we even had a Chinese artist using JellyCat. We never paid for any KOL for any artist to showcase the plush toy. It was purely because of its cuteness. So, we had for example Angelababy, the Chinese Kim Kardashian – she was holding a JellyCat in one of her TV shows, so of course it was a free PR for us.

Matthieu David: Incredible, it’s incredible. For people who are listening and may not know China very well, she’s one of the most famous person – KOL I would say – people would love to have, would give millions of USD to have her as a KOL.

Renata Thiebaut: Yes, so as soon as they like a product, they can do some free advertisement and we were not even aware of that and we got a lot of feedback from consumers and we were like – oh what’s going on! So, we found out that she was with a JellyCat in one of her shows. So, it happened quite often in China actually, not only with her, but even with some others. So, we could grab all of these materials and use as a marketing material to promote our brand, without having any extra cost.

Matthieu David: The thing which is surprising and in some way it’s something – it looks random. The way you talk about it, it looks that by chance you were successful, but I don’t think that’s the case, I think it requires a lot of work and a lot of thinking. So, what’s the strategy behind it and the tactics which were not costly, but made a big effect?

Renata Thiebaut: The first thing that I believe was the key milestone for JellyCat in China was data. We saw in the beginning that our approach was wrong. Our strategy was wrong. So, within 6 months we had to re-shift and to re-strategize the brand, because like you said – we thought it would be a toy for a kid, but in the end most of our consumers were 25 years old plus. Young women going to work and they had the need because they work so hard, they had the need to be with a JellyCat either inside of the bags, to bring their JellyCat around, to go to a coffee shop, or also go to work with a JellyCat. And this is so true because most of my colleagues they have a JellyCat on their desks and they work holding the JellyCat.

So, we positioned ourselves at that time – we had to change our mind-set and also our strategy to show that JellyCat is a fashionable accessory. So, you have these smaller ones that you can carry around, put inside of your bag. So, if you go to a coffee shop or if you go to work and also of course we cannot just eliminate the case that it’s a good gifting for new-borns. So, we had to differentiate different audience and to work in a different communication message to these different audiences to show that the product is 100% safe, you not have allergy with the product. So content was the second thing that we really, really worked hard on to position JellyCat at the top plush toy in China.

Matthieu David: How did you find out that you had to change the positioning, because you were targeting children and it seems that it was not working, so you found out that the few sales you had were actually more 25 year old and from that – with the few sales you had, because I believe it was not many – you tried to differentiate and started a campaign targeting them and that worked. And then you scaled that and you put even more investment into it because you saw there was a momentum – is that correct?

Renata Thiebaut: It is correct – so in the first 3 months sales were very low, but we saw this tendency that most of the buyers and the visitors of the shop for example – the ones who would put the product in the basket but not convert — were 25 year old plus. I think the most important factor that year in the first year was 11/11 – we were definitely not prepared for the campaign.

Matthieu David: Which year was it?

Renata Thiebaut: It was in 2015. So the first 11/11 we sold so much more than we expected, let’s say 10 times more, 15 times more and the warehouse of JellyCat in the UK they were shipping the products 24/7. So you know in Europe usually people do not work on weekends right, you have restrictions with even transportation, trucks are not allowed to transport during the weekend and especially on Sundays. So, it was very stressful but we managed to deliver all of the products we had and from that time on, the first 11/11 on, we became the top one plush toy brand in China. So, I want to say that – 11/11 was very helpful for us as well.

Matthieu David: As I’m listening to you I understand that the shop is managing the cross-border e-commerce in China, so it is TMall Global right – and the warehouse – for people listening to us who are maybe not very familiar with TMall and the ecosystem of e-commerce in China — you can sell in China when you have a warehouse outside of China, and this is called TMall Global, JD is doing the same, JD Global, and you don’t need to have the registered company in China – you ship from the warehouse which actually could be a free trade zone as well in Shanghai, maybe as what you do now, with the free trade zone in shanghai or in Hong Kong to ship, and at that time it was UK.

Renata Thiebaut: Yeah, so that time it was the UK – we are using Alibaba’s logistic network which is called Cainiao to ship the products out of the UK to the final Chinese consumers, but then we were only on TMall global at that time. So JellyCat started expanding. And this is what I tell all of my clients, I do not think it’s a good strategy for you to come to a new market like China and have many sales channels for example. Sometimes they want to open on JD, on TMall and on different platforms like Kaola, The Little Red Book – it’s always good for you to start slowly, to choose first the best platform and then you do a trial in the market – if the product is not good you can adjust or the communication because you need to select a hero product for you to push the brand in the Chinese market.

So, we started first with TMall global shipping out of the UK but as soon as we expanded our business and we opened a JD store, then we open on TMall domestic that business model was no longer valid. We needed to again re-strategize. So, this is the message I think with JellyCat we always needed to rethink your strategy and think fast actually because e-commerce is so dynamic in China.

Matthieu David: It took you about 3 months before changing – as the sales were not good, 3 or 6 months I don’t remember how many months. Initially when you have a new product –and let’s take JellyCat as an example, how do you get clients? It is said by many people that when you need to get a client and you’re not known – and JellyCat was not known at that time in China I believe, you have to spend a lot of money in marketing, and you said this was a small company that did not have a lot of money to spend, so how did you get your traffic on your TMall? Was it still on Baidu what you were doing initially? Was it purely on Alibaba platforms? Could you tell us more about how you drive traffic and the specifications of JellyCat?

Renata Thiebaut: The best way for you to drive traffic to your online shop when you have a limited budget is to focus on the marketplace. You have a banner display, you have keywords, you have many different ways of driving paid traffic to your store, plus all of the free traffic that you can also have if you join a campaign for example if you do corporation with other brands. So, there are many ways for you to drive traffic.

So, I do not think Baidu would be a good strategy in the beginning if you have a limited budget because you might not convert. So, the focus should be to do marketing within the platform. As a rule of thumb, we suggest a marketing budget of around 20% compared to your sales target to be invested within the platform. So, it is a bit high but as soon as you gain more free traffic, you can drop it to let’s say 15%.

Matthieu David: I see, I think the next question for someone listening to us and who would like to have his shop on TMall is – yes, I’m spending 20% but then do I have the data, or is it owned by Alibaba, and can I retarget them? I believe you can retarget through Alibaba platforms and everything which is owned by Alibaba, including ele.me and so on, but I don’t believe you can really drive your traffic and convert them through WeChat or email because I believe it’s still the ownership of Alibaba. Would you mind sharing about this investment that companies do – 20% as you said of sales – it’s sizeable, and then do they own the data?

Renata Thiebaut: The company does have access to the data. If you have an online shop, you have access to the industry data and also to your shop’s data. So, you need to be able how to use this data for you to understand what is wrong and what is right in terms of strategy. So that’s why we are 100% data-driven and especially myself, I am in the business intelligence unit of Web2asia so my role is really to take data and strategize the business or re-strategize the business of our clients.

I can give you a very clear example of what I did with Aldi. We are selling milk – fresh milk and UHT milk of 1 liter in China. Sales were good but we noticed that we are not selling as well as other brands, especially European brands and I tracked all of the attributes of this type of product in the industry and also the top-selling brands or Chinese brands as well, and we saw a trend that Chinese consumers would prefer two different types of milk. One was 250ml instead of 1 liter, and the second one was milk with enhanced calcium for kids.

So, if you do not have this data, you are not able to understand the consumer’s behavior, right.

Matthieu David: I’m sorry to interrupt but you got this data through the fact that TMall or Alibaba is sharing with you industry data because you have a shop on TMall. When you have a shop on TMall you have access to data on the industry – but you cannot access all the industry but only your own industry. One thing I’d like to add about Aldi – people may be surprised by listening to us that Aldi is selling through a platform – a marketplace. Like Aldi is not selling on amazon or – but TMall is a place where you open a shop. It’s like a street. It’s like a department store and you open a shop. So, you find out the data on TMall which helps you to reallocate your effort and maybe redesign the product?

Renata Thiebaut: Yes, we needed to redesign the product, we needed to be able to follow all of these trends and see what the Chinese consumers want. We localize a lot of products as well. Aldi is a German supermarket so we are very, very strong in Europe, but European food consumption is very different from China. So, in China, we sell hotpot for example, that we do not sell back in Europe. So, we need to do this – whenever you go to a different market, you need to have a certain level of adaptation and localization of the product as well.

Matthieu David: My understanding is that the key advantage of Aldi is the ability to source European products which are more qualitative and maybe at a discount price because Aldi has a bit of image of discount in Europe if I’m correct, and the ability to actually bring in a hotpot – European vegetables, European products would be the asset – that’s what you concluded?

Renata Thiebaut: Yes, so we adopt a very different strategy in China, we wanted to be very competitive with lower prices just like in Europe, but also offer products that Chinese consumers are used to, like hotpot, or noodles. Chinese noodles. We ship from Australia because of the cost. It’s much cheaper to ship from Australia than Europe, but then our Aldi started procuring within the Chinese market as well, but with European standards. So, for the Chinese consumer, food trust is the key. So, you can manage to leverage what you do in Europe, cheap products but very high quality, and to adapt to the Chinese market as well. Because there were many food scandals recently in China, so this is very important. And Aldi like you said, they started with a TMall Global shop. I think this is their standard strategy so you can test the market first. Then you move to TMall domestic, then you start opening your own shops. So our first store was launched in June last year in Shanghai, and right now we have a few of them in shanghai, around 5 and we plan to expand to other cities as well, for a couple of thousand shops within the next 3 years.

Matthieu David: Yeah, for people not to be confused when you’re saying shop now – you’re saying offline shops.

Renata Thiebaut: Yes, simple shops.

Matthieu David: Yeah and it started with the TMall global and then they had a beautiful shop actually – very well designed – are you managing them at all?

Renata Thiebaut: We manage the shops and we integrated our system with the physical shops and the online shops as well on ele.me or on TMall, for example, because we also need to understand the consumers, if they were repeated buyers – how we could target these offline consumers to drive traffic to our online stores and vice versa. And, our key strategy for Aldi is O2O, online to offline (more on O2O in China here). With the integration of this data, from all of the sources that we have of the sales channel from physical stores, online stores to also social media on WeChat, Little Red Book – that’s what we use to strategize the business.

To give you a concrete example – we were expecting to grow around 23% this year, it was our very let’s say, simplistic way of thinking last year to take things slowly and really use data to grow the business more in China. But because of the corona virus I think our projections are off and they are going to expand much faster and much, much more than this. Only in February and in March we saw that the sales grew 20 times more than the average.

Matthieu David: So, the crisis was beneficial to Aldi because people were delivering home.

Renata Thiebaut: Extremely beneficial. For some industries we could see an impact of let’s say 40-50% in their sales. Fashion industry – perhaps a bit less, and shoes for hiking for example – we saw a drop of 40-50% in sales. As for other mummy and baby products and also food related products, there was a big increase. So, in Aldi’s case I can tell you, it was around 20 times more than our standard sales.

Matthieu David: Interesting. What about now, the post coronavirus because – people who may listen to us who are in Europe or in the US may not know, but in Shanghai now we are going out, bars are open, even night clubs are open, everybody’s wearing masks but everything is working. Is it back to normal or people keep their habits?

Renata Thiebaut: Right now, we’re still very, very up because not being the whole of China is normal. So big cities like Shanghai are slowly going back to normal. Even though it’s not 20 times more than the usual sales, it’s going to be much higher because you gain awareness, so people who did not shop from Aldi before now know Aldi, and they’ll probably keep shopping from Aldi. That’s why it was also beneficial in the sense that the brand will gain awareness and also more buyers. Our delivery is very fast, it’s up to 30 minutes in Shanghai for example if you’re nearby. Since we are going to expand to other cities in China, this will spread all over the country. So, we’ll keep these 30 minutes – our consumers should be comfortable. If they either want to shop online and receive their products in their office or at home or if they want to pick up offline.

Matthieu David: How did TMall react to the fact that you opened offline shops? Because in some way you are driving traffic out of their shop, I mean you are getting your independence which is something that I think Alibaba tries to avoid, even working with JD, they may try to avoid that their brands work with JD.

Renata Thiebaut: Now I do not think that the market places are as concerned as before for two reasons. One is we are facing a new era of new retail. So, this is the trend, even Alibaba is doing the same with Hema for example. So, we needed to change the mentality that offline compete with online. It really goes hand to hand, because the more people know your brand, they can also go and shop online, so you can leverage also the data you have from offline to convert to online. So there are many ways to do this, if you offer QR codes with coupon discounts for example or when you do an online campaign you can have offline events to drive traffic to your online shops so you really need to be creative when you do O2O when you have different sales channels instead of thinking that it will hurt your online business, but actually it will create more awareness to drive more traffic and business to your online shop.

Matthieu David: How do you organize your team? That’s one thing I’m curious about – you seem to expand in very different directions and to do a lot of different things. Managing a TMall shop is not only setting up technically speaking the TMall shop – it’s creating banners, it’s about managing PPC, managing media buying, it’s about also doing brand reputation on Baidu and it’s listed on your presentation, for instance, social media, and now offline shops! How do you organize your team to have the talents? Could you help us understand do you have designers’ insight or do you actually partner with other company’s?

Renata Thiebaut: We do mostly in-house, and actually we did a change management implementation in the company. Before it would be a very up-down model that we had in the company and let’s say you had a director – an account director, then you had the manager and you had different people like a designer, customer service representative to do different tasks and nobody would be aware of what the other ones are doing, which is not too good for e-commerce because we all need to speak the same language and to be 100% aligned to grow the sales and avoid returns or problems that may arise with e-commerce.

So, two years ago we changed our management structure to be more project-based and it is called flat management. We divide the teams by different projects and they only take care of projects that are in similar categories, so they can have more expertise. For example, if you have a food client, all of the team members will take care of food-related clients, or mum and baby, or fashion, because if you do food and fashion at the same time, you cannot really focus and have a concise strategy because it’s completely different. So that’s how we work. Even though we have people to do different tasks, all of them need to be aware of what they are doing.

Matthieu David: In terms of talents and functions, how is a campaign organized? You have a creative person, who is going to design the campaign, then you have some people who activate the campaign? Would you mind describing a little bit the different steps of a campaign and the different people involved in it? It seems to be a lot of different talents and resources.

Renata Thiebaut: Yeah it requires a lot of resources. I’ll just say between 7 – 10 people per project because customer service is so important in China to not only upsell the product but for crisis management as well if the product is broken to avoid bad reviews. So, we start with customer service and you need to train them, they really need to understand the brand and all of the characteristics of the product. Because they are the face of the brand – they really represent the brand.

Then it goes to design, you cannot write the wrong price on a design for example to set up the wrong price within the shop. So, you always need a double to triple layers of double-checking, because the campaign period is so stressful that you need to have everything in place before midnight. Right. If the campaign starts at midnight. So, you need to allocate one project manager who will coordinate with all of these different people in the team.

So we divided the campaigns to give you a concrete example into stock first, we do the stock preparations and also the pricing strategy. And then you have the pre-warming campaign, so only a few selected products will be part of this pre-warming campaign. Consumers pay a deposit and they get extra discount or they get a special gift, limited editions, and things like that, and then you have the campaign day which might have another set of discounts, another set of gifting. So, you need to prepare the campaign through different phases and to be ready before the campaign starts.

It was very funny actually – well, of course, it was interesting, very stressful, but thinking back at the beginning, especially cross-border e-commerce in China, or even e-commerce in China, the campaigns they were so stressful, when a lot of manual work that we had to do and the system – like the marketplace system would freeze for a couple of minutes and you would not be able to buy the product and then by the time the product was online, it was sold out. So, these were the type of issues we would have before with the campaigns but every year it becomes much better. I would say around 6-7 years ago, the system would freeze for about 30 minutes, so each year it was less and less. 20 minutes, I remember 2 years ago it was only 3 to 5 minutes. So, this 11/11 in 2019 it was nearly perfect.

Matthieu David: Yeah, you’re talking specifically about Double 11 campaigns which are nationwide campaigns (learn more about the online record-breaking sales “Singles Day”).

Renata Thiebaut: Well 11/11 is the world’s largest campaign. So, we are talking about trillions that are sold within these one-month long campaigns. But it is not the main campaign. For some industries, you sell much more in other campaigns than 11/11 itself.

Matthieu David: Which one would you emphasise, there is 9/9 for one, there is 12/12 – which one do you think is interesting and not well understood?

Renata Thiebaut: The main campaigns in China are mainly for the Queens Day which is March 8^th, then you have 6/18 – then you have 11/11 and Chinese New Year, but Chinese new year campaign is very good for food and beverage, for example, it’s not too good for other industries, so we see sales really down in that month for different industries, and very high for food and beverage. So, these are the main campaigns, and then you have the smaller ones, like Black Friday type of campaign, 12/12 and then you have Chinese Valentine’s Day. Back to School is a very good campaign for kids for example, not only for backpacks or products that you usually buy for your kid to go to school, but also shoes and clothing for kids. So you need to think also that your campaign is not only 11/11 driven – so there are many campaigns, let’s say once a month or even more, that you need to consider, and Flash Sales as well that you can be a part of, it drives a lot of traffic for your brand. So, when I talk about preparing for a campaign, it’s not only 11/11 – it’s pretty much every month you need to have everything ready before a campaign starts.

Matthieu David: Does it mean that it isn’t worth making a campaign on your own, does it mean that you have to target those moments? Doesn’t exist some independent campaign – you want to celebrate? Maybe the brand is from the UK and they want to celebrate the UK’s day and then you do a campaign on your own. Is that something which is existing or it’s something you don’t even have to care about, you have to focus on those big days organised by Alibaba?

Renata Thiebaut: No it really exists, you can do your own internal campaign. Especially if you have a CRM system in place, you can target your silver, gold, platinum members and you can offer different discounts but it is not as big as being part of an official campaign because you are going to get all of the traffic from a bigger campaign. So, this is the difference – traffic-wise, and being part of an official campaign will give you much more visibility within the marketplace than just doing on your own.

Matthieu David: To share one data on Metro, one of your clients, and again the same as Aldi. People will be surprised that Metro has a shop on TMall. That’s very common, so you go through another distributor to sell and within one day in your presentation, it was 11/11, Metro sold 17 million renminbi, if I understand the graph correctly, because next week you put TMall, which is 91 billion and we were thinking, you made 91 billion! And then I saw it was TMall. So Metro did like 2 -3 million USD within one day, for 11/11.

Renata Thiebaut: I think it was within one hour, because usually what shops do for 11/11 are much more than these, let’s say 50 million or 20 million, depending on shops like Zara, Uniqlo, it’s nearly 1 billion renminbi.

Matthieu David: Yeah, I don’t understand then the graph correctly, it should be more you say – or maybe it’s in USD I don’t know.

Renata Thiebaut: Yeah it should be in USD because the campaign starts one month before, so it is not a one-day campaign. So the way that TMall does is, you need to have the pre-warming part. Let’s say 11/11 starts around October 20, so people start putting products in the basket, or they pay the deposit, and then before the campaign starts you have another round of the pre-campaign phase, and the official campaign starts at midnight of 11/11 and it will last 24 hours. So, from midnight to 1 AM, we have a huge peak of sales, and then it goes down a lot so around 1 AM, who paid the deposit will have to pay the remaining one at 1 AM. So, this will be much less – we’ll have fewer sales at 1 AM than at midnight and then again – sales will slow down and in the morning around 10 AM, you’ll have another peak and before the campaign starts around 8 PM or 9 PM, we’ll have another peak. So, we’ll have let’s say different peaks of sales throughout the campaign, but the main one that you have most of the sales, most of the traffic is at midnight.

Matthieu David: We talked a lot about TMall, we talked a lot about Alibaba, but now JD has emerged, I think it’s been already 8-9 years that JD was created. WeChat is selling; you have also Pinduoduo; you may have Douyin preparing something to sell online. What’s your take on those other platforms? JD is very similar to TMall, but what about WeChat, Pinduoduo and other platforms?

Renata Thiebaut: The best platforms in China are the ones that are more relevant but you need to consider also your type of product. So, if you compare TMall global and JD worldwide in terms of let’s say health supplements, for example, TMall global is much stronger than JD worldwide. So then when a brand wants to select a platform, they would prefer TMall global because there you have more exposure.

So, you need to see that JD is very good with electronics, I actually think they can be better than TMall for this, even though TMall is trying to catch up, JD is very good I think with logistics, first of all, and also with electronics and house appliance. There are other platforms that are doing super well in China, one of them is Kaola, especially for cross-border e-commerce in China.

Matthieu David: Owned by Alibaba now. I didn’t mention it because it has been bought by Alibaba at the end of the day, I wanted to talk about other platforms, but let’s talk about Kaola because it has been recently bought by Alibaba.

Renata Thiebaut: Yes, so Kaola is a very good example, they are out of the Tencent, JD, Alibaba ecosystem, and they are from NetEase which is their traditional business model is to have the search engine and online games. So Kaola adopted a direct import business model to sell foreign products, especially beauty products and supplements, and they started growing a lot. So that’s why they got acquired by Alibaba, but only their cross-border business branch got acquired by Alibaba, especially because they were doing very well.

And the same happened to The Little Red Book, it is a social media app, or it was a social media app, but now its social commerce. You can also open your e-commerce website within The Little Red Book, but it’s very good only right now for beauty products or health supplements. It’s not good for house appliances or other products. So, you need to see these categorizations (find the ultimate guide to leading digital platforms in China). Some platforms are better for some types of products and others are not. So, Alibaba also acquired Little Red Book –

Matthieu David: Oh really? I didn’t know that. Very, recently right?

Renata Thiebaut: Yes.

Matthieu David: So, what you are saying is that platforms are segmented now. The maturity of the internet in China makes it possible to segment with JD, with its origin in electronics, to keep this identity into electronics, maybe male-oriented. TMall is a lot of fashion and so on and there is a platform for health supplements. Is it what you’re saying?

Renata Thiebaut: This is what happens in the industry, especially because of JD’s background, they were purely an electronics platform before, but this is not what they intend to do. JD really wants to grow their business to fashion and to cosmetics, to beauty. They are doing a big push also to expand their categorization, so people do not think that JD is very electronic-driven and it is happening very often with many marketplaces in China. Suning was also very electronic-driven with home appliances, then you have Yihaodian, which was very food-related before, a top food seller marketplace in China, but now they sell everything as well. So they really want to adapt and move very fast to cover different categories.

Matthieu David: It’s evolving fast. We are at the end of the interview and I’d like to ask you more personal questions. My team found out that at Harvard you published some papers, how do you find the time to cover topics like an analysis of the US-China trade war, how the section 301 China intellectual property case may impact new directives to promote the Made in China 2025. Seems so technical, how do you find the time? How do you organize your days?

Renata Thiebaut: I know that e-commerce customers are a lot of work and also energy from my side, but I am at that stage of my life let’s say that I really want to pass the knowledge I acquired as being one of the first ones to do, especially cross-border e-commerce in China. And I do believe that this is very helpful for business in other regions as well. So, whenever I publish something, either a book – I have published a book with them and I just finished the second book, our second series and I really try to be very practical.

Matthieu David: What’s the name of the book?

Renata Thiebaut: The book is about the digital supermarket, One Belt One Road, how we can bring cross-border e-commerce in China show to this area. So everything is related to my work, which makes it very easy because I want to write about something very practical, like how governments and how companies can learn from China and what we have done in terms of cross-border e-commerce in China strategies, for them to also grow their domestic business to disrupt technology in their countries. So, this is for me more of a contribution to the students and governments to learn from China and apply these strategies or business models back home.

Matthieu David: It’s interesting and I do the same. You are saying, we are Chinese, and I do the same with Chinese people living overseas and they say, why do you say “we”? Do you consider yourself as Chinese?

Renata Thiebaut: Well, I’ve been in China for 14 years, so I am very proud of being half Chinese, let’s say, I do not look Chinese but I really consider myself as a local and I am very proud of being able to represent China somehow in my own way.

Matthieu David: I have a few last questions. You have been contacted within my team and we sent you the usual questions that I ask interviewees, what books inspired you the most in your China journey and entrepreneur journey?

Renata Thiebaut: I like a lot of philosophical books, for example, Sun Tzu was the very first book I read about China.

Matthieu David: Art of the War?

Renata Thiebaut: Yeah. So, I really try to take the main meanings and the main teachings to my career, so this is a very good book, The Art of the War, to how you strategize your business and also your career plans, your goals.

Matthieu David: What would you like to share, what did you learn from The Art of the War?

Renata Thiebaut: You should not compare yourself to your competitors, for example. So, I think this is very good learning, even at Alibaba, Jack Ma repeats this, I do not want to be like Amazon, right. So we need not copy each other’s business model, but also try to innovate and to bring different perspectives, different offerings to consumers. Everything is about the consumers, right. If you are stuck at being like your competitors, you’re not going to provide the best you can to your consumers. So, I think this is the meaning I got from the book, that even though he does not directly say like this, but this is how I translated this into my business and into my career. I keep pushing hard in terms of data, for example, to really innovate what we currently do.

Matthieu David: I remember a conference I attended where the founder of 360 was saying — I kept looking at Baidu because at that time 360 was also a search engine and it failed, it was actually just an anti-virus software at the end because it was too much focusing on the competitor. We have this actual feedback from Chinese entrepreneurs as well. What do you read to stay up to date about China?

Renata Thiebaut: We need to read daily, right, all of the news about e-commerce, regulations. Well, I have a lot of background, I really need to actually know all of the new regulations, the new laws regarding e-commerce and cross-border e-commerce in China, advertisement law. So there are some good sources. Some good websites like TechNode, even your reports from Daxue Consulting – I read them a lot with consumer trends. So, I would suggest your reports, for example, McKinsey, PwC like the ones that we can trust. Because you see so many things online, sometimes they are not necessarily a good source for you to be inspired by. You need to be very careful when you read things and the things you can really trust and take that as learning as well.

Matthieu David: What book on China you would recommend to someone who wants to know more about China? Maybe it’s not a book, maybe it’s a movie or something else, but what would you recommend to read, to watch, to do, to learn more about China?

Renata Thiebaut: There is one very good book about AI and China in the US – so I would suggest this book because it is about the future.

Matthieu David: AI Superpower by Lee Kai Fu?

Renata Thiebaut: Yes, AI Superpower, it is a very good book for you to understand the future and how to adapt your business to the future as well, because many businesses – you know, you need to go tech. you need to implement AI for you too – let’s say, survive in the business. You cannot just keep˙ having the same traditional type of business as before.

Matthieu David: Yeah, I was speaking to someone on the podcast mentioning this book and it has been really a very best – it’s a bestseller right, has been very successful.

The two last questions I would be very interested in your answer because you have been in China for 14 years and you have been in a spot where you could witness a lot of things and see a lot of evolutions. What unexpected success and unexpected failure have you witnessed in China which was a surprise to you? As an example, I always use Carrefour. When I arrived in China it was successful, they were all over the place,˙ and then they left. They sold to Suning and I was crossing Carrefour there were two logos, that was so surprising to see the two logos.

Renata Thiebaut: I think failures can inspire us more because we have to avoid committing the same mistake, and mostly it’s the same mistake that they do. They do not understand the Chinese market, so most of these foreign companies, especially the big ones, when they come to China, they adopt the same business model as in Europe or in other countries or in the US. Marks and Spencer, they had a very wrong strategy for China. We worked with Marks and Spencer before with the social media, for their content, but the thing is, if you are not willing to adapt to Chinese consumers, you are prone to fail and that’s what happened – they had to leave China.

Matthieu David: Yeah, they had an offline shop as well close to People’s Square in Shanghai right? And, what’s surprising you actually is that even though big companies who are making so much efforts to succeed don’t make the efforts to actually really understand the Chinese market.

Renata Thiebaut: Yes, this is true, plus the competition. So, you are competing for price with other Chinese brands as well. If you do not want to change your style because Chinese consumers, they do not exactly dress the same as British consumers. So, they were very classic, everything was black or grey or white, so nothing different that they could buy from Taobao for a cheaper price or nothing that it would strike the eyes for the Chinese consumers to buy. So that’s why they didn’t adapt, plus price point – that’s why they failed in China.

Matthieu David: And the opposite, what success has been surprising to you in China? I’m asking this question because the thinker and consultant Peter Drucker was looking at unexpected success, unexpected failure, to assess innovation. I think your perspective is very interesting to that concern, to see what success you have not seen coming and which came?

Renata Thiebaut: I will say Intersport is a very good example, because they resell other brands, like Nike and Adidas, and this is a very difficult thing for you to be a reseller in China, especially if the brands you are reselling, they have established business in the market. Nike, Adidas is very well established in the Chinese market. So, what Intersport did to be the first one sports brand in China or retail in China was to focus on limited editions for example, or products that Nike and Adidas official stores would not have. Also, they did a partnership with Alibaba to implement technology and to give a better consumer experience to the buyers. For example, in Beijing, they have a big screen that is automated, so whenever you pass by, let’s say it’s a woman that is passing, they offer women related products and you can see the products. Then you enter the store, in which everything is touch base, you can try on the products, you can shop online, you scan the QR code; so this is very AR driven. They use a lot of technology to leverage their business in China to be more competitive and to be more well known. So usually consumers could buy from Intersport instead of the brand itself.

Matthieu David: Intersport was a success you were not expecting initially to be as big as it is?

Renata Thiebaut: I would not expect because they resell other brands. That’s the reason. So, I worked with them for this consulting strategy on O2O and how to leverage their brand. We had to do product selection, push different products, and then they signed this agreement with Alibaba to do special technology to leverage their brand in China. I think they are doing very well, it’s a very cool brand, a very cool case, let’s say, that we could learn from.

Matthieu David: Thank you very much, was very, very instructive, was very interesting. I have to say – I was a bit nervous before interviewing you because of everything you did and you do and you are doctor, you have time to write papers, you are a researcher at Harvard and you work on e-commerce in China, managing a business. That’s very, very impressive. Thank you for spending time with us and I hope that you enjoyed it and I hope everyone listening to us also enjoyed it.

Renata Thiebaut: Thank you very much, it was my pleasure.

Matthieu David: Bye – bye everyone.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

Do not hesitate to reach out our project managers at dx@daxue-consulting.com to get all answers to your questions

This article China Paradigm transcript #101: Managing cross-border e-commerce operations in China: Successes and failures is the first one to appear on Daxue Consulting - Market Research China.

 Source: askci research, of the 3D printing market in China

The history of 3D printing in China

As a big manufacturing country, China had embraced 3D printing with central-government-level supporting policies since 2012. In 2015, Ministry of Industry and Information Technology labeled 3D printing as one of the strategic national goals. Come 2017, the National Development and Reform Commission emphasized the industrial 3D printing, namely for large engines and space technologies. In 2018, China’s National Intellectual Property Administration listed companies in 3D printing materials as key support targets.

“The next trillion dollar industry” was the name given to 3D printing by Pascal Gobry from Business Insider. Around 2015, 3D printing in China was suggesting the creation of new opportunities in almost every industry, where with the touch of a button, actual objects can be printed out of an array of materials. Printing has now gone from spreading ink on a sheet of paper, to transforming digital files into 3D objects.

This is achieved by arranging a variety of materials including polymers, glass, metal, wax, edible food, ceramics and even human tissues into complex shapes, which would be nearly impossible to replicate by hand. Some of those objects will create the opportunity to save and extend lives or bring ease to our daily routines. 3D printing objects are achieved with successive layers of material laid down one on top of another until the desired object is accomplished. In other words, the 3D printed object is a superposition of thinly sliced horizontal cross-sections of a chosen material. The possibilities of 3D printing are breathtaking.

However, it’s not quite as easy as pressing a button. Virtual designs must be created in the form of CAD file (Computed Aided Design) supported by 3D modelling programs. Those programs offer 3D designers the opportunity to conceive objects from nothing and the imagination is free to move beyond the human handiwork. Scanners also produce CAD files, enabling existing real objects to be identically replicated in digital formats, which is often much quicker than recreating the original object.

A software must slice the digital object into horizontal layers so that the printer superposes printed slices one after the other resulting in a three dimensional object. The printing process may be performed by various technologies being improved constantly. Technologies most commonly exploited are selective laser sintering (SLS), fused deposition modelling (FDM) and stereolithography (SLA), each suggesting different advantages and responding to specific demands.

Applications & breakthroughs of 3D printing in China

The possibility of printing 3D objects will revolutionize most industries since its application is beneficial in many sectors. The application of 3D printing includes design visualization, prototyping, architecture, education, geospatial, healthcare, entertainment, retail and many more.

Food industry

Companies such as Foodini and the German Print2Taste start-up are exploiting this opportunity of creating innovating designs, shapes and decorations with printed food. The printed objects are edible by printing edible food such as icings or soft food.

Construction industry

China was noticed since 2015 by creating the “Tallest 3D-printed building” in Suzhou. The Chinese company seems to be responding to the need to build fast and efficiently. However, they’ll be facing stiff consumer hesitance as previous attempts to build quickly and efficiently had resulted in several high-profile building collapses.

Nevertheless, Ma Yihe, CEO of WinSun, is optimistic about 3D printing in China. He believes his company will build “dream factories” since the process would reduce construction materials of 30% to 60% and labor needed would be cut significantly. What’s more, It would use sand and other waste, enabling more recycling and the use of local materials. The buildings that result from 3D printing would be a lot cheaper and revolutionize the entire construction industry. Several factories were already underway in China and one is located in Dubai. However, WinSun is very controversial for patent reclamations and security concerning the stability between printed layers in the event of an earthquake.

Source: 3D printing media network, river revetment wall build in Suzhou

After years of refinement, in 2019, WinSun successfully built the world’s largest 3D-printed structure in Suzhou: a 500-meter long river revetment wall. There are many positive points about 3D-printed bricks and structures, compared to traditional material and constructions. Not only can an artificial riverbank follow the natural shapes better, it also better protects local flora and fauna. In addition, implementing and fabricating custom-designed 3D-printed bricks is way less expensive than solid walls and dams. 3D printing in China has its future, especially in construction sites where quality, precision, and speed are required.

Medical science and research

Another field that is inspiring is 3D bio printing, in the medical science world. By printing cells along a predetermined pattern, human tissues, organs, and blood vessels could be replicated. Organ printing would change the medical industry and improve life expectancy drastically. Many biotechnology firms are currently aiming at tissue-engineering applications and about to revolutionize the medical field.

In China particularly, there’s a serious shortage of organ donors. Even though the number of organ donations are on the rise since 2016, the donation per capita is only around half the world average. Anything that helps more Chinese access higher level health care would be welcomed by the medical industry. According to Yong He, professor at Zhejiang University, 3D bioprinting is valuable for pharmaceutical development and organ substitution.

However, big obstacles accompany progress, especially in the bio-medical area. Compared to natural organs, 3D-printed organs have less precision, require biological compatibility and structural strength. Those obstacles underline the multitude of bioprinting materials required to replicate a functional organ. What’s more, there’s already a strained relationship between doctors and patients. It will be difficult for surgeons to convince the population that 3D-printed alternatives are safe. Clinical trials and public education campaigns are necessary, if China wants to save more lives suffering from lack of suitable organ.

Manufacturing

Manufacturing has been improved thanks to complex 3D parts in a single build. Designing is more efficient and the experimentation phase can be completed much faster. For a long time, manufacturers have been using 3D printing to make prototypes and undertake research. If they target directly the end users, the customized products will only cost a fraction of what the traditional manufacturing does. In Hainan province of south China, a Chinese company called Sanya Suhai printed the “first 3D-printed sedan car”. The vehicle measured 3.6 meters long and 1.63 meters wide. It is powered by rechargeable batteries and reached the maximum speed of 25mph. It’s not ideal and only a work in process, but certainly a novel way to use the omnipresent lead acid batteries in China.

Education

For all those industries, art and reconstructions for education are positively impacted by 3D printing. Since 2007, 3D Print Art Shows developed to let artists express themselves in various new ways. Priceless and unique artifacts in archaeology may be reproduced for hands-on studying and research.

iDreamer 3D is another example of how China emphasizes the education of 3D technologies to teenagers. With the help of online courses, teenagers can immerse themselves with numerous 3D printing cases ranging from vehicle building to city planning. Likewise, Zhejiang Science and Technology Museum introduced China’s first 3D experience park as early as 2013.

Expand space exploration boundaries

NASA has been developing this new technology, competing to design and build a 3-D printed habitat for deep space exploration. According to Sam Ortega, Centennial Challenges program manager “The future possibilities for 3D printing are inspiring, and the technology is extremely important to deep space exploration.”

China has programs of its own too. the Chinese space program is building 3D printed space suits. 3D printing would allow astronauts to print items with a 3D printer directly in space with no freight difficulties. Those are being developed by the Shanghai Academy of Spaceflight Technology. With serious research into 3D printing in China, astronauts will be safer in their suits while spacewalking. In addition, extra suits can be constructed if they’re needed, saving time, money and resources.

New opportunities & services embraced by the Chinese government

3D printing was already getting investments from the Chinese government in the early 1990s, investments of $3.3 million were injected into in innovating institutes to promote manufacturing technologies.

As 3D printing requires mastering technologies and the capacity to create new objects relies on 3D designers, China founded the first 3D Printing College in the world, Baiyun-Winbo 3D Printing Technology College in Guangzhou in 2015. The popularisation of 3D printing means a higher demand for people producing the digital files and China is planning to respond to that need. There are also 3D printing bureaus such as Shapeways and Ponoko offering inexpensive digital designs with a relatively limited range of objects. In addition, according to Simon Shen, CEO of Kinpo Group, the Chinese government installed 3D printers in 400,000 elementary schools from 2015 to 2017. This benefits the Chinese society in the long run as teenagers are educated and skilled in 3D technology from a young age.

Source: Jiemodui, Primary school students curious about 3D printing in China.

Currently, the top-rated industrial printer is Union Tech, taking 16.4% of the 3D printer market share. Stratasys follows with 14.8%. According to Jenny Lawton, CEO of MakerBot, 3D printing will become mainstream, and certainly, 3D printing is getting implemented in China at a very fast pace. In 2014, China International 3D Printing Exhibition was held twice and recognised as one of the most valuable industry shows in the world.

Fast growth & Transformations of 3D Printing in China

The fast growth of 3D printing is partly attributed to the support of open source platforms. RepRap is a 3D printer sold for about 1,000 dollars enabling people to customize and develop open source ideas. Open-source communities such as Thingiverse and Cubify are gaining more and more interest as they provide hyper-customization and support sustainable development.

Enthusiasts for 3D printing are growing fast since 2011, thanks to its rapid development and acceptable price ($250 to $2500).  People from all backgrounds are acquiring 3D printers and large-scale utilisations will increase customer options. Fabrication may become totally personalized with simple adaptation of the digital file. Thanks to 3D printing, print-on-demand and mass customization are possible.  In May 2015, the highest rated desktop printer for personal printing was the Form 1+. It reached more than 400 reviews of fully satisfied customers and is considered by 3D Hubs as the most popular resin printer.

The democratization of the 3D printing technology and knowledge is expected to change the nature of commerce according to specialists. Indeed, end users will be able to manufacture their products on their own, meaning that products wouldn’t be bought from other people or corporations. Trade of the digital 3D object will however remain, so would the raw material. A long marge of progression still remains before reporting such transformations, but in our lifetime, new concepts are ready to revolutionize many industries and China making sure that it stays abreast of changes in advance, compared to foreign countries. As the president of VisenTOP, Xiao Guodong stated in 2015, “People in China are both passionate and perplexed by 3D printing technology.”

This article Future applications of 3D Printing in China is the first one to appear on Daxue Consulting - Market Research China.

China’s mattress market overview

The consumption of mattresses in China is relatively low compared to other countries. The brand concentration is also low, with international brands taking the premium spot and domestic brands taking most the market.

China’s mattress market is the largest in the world

Data Source: Qianzhan, total Consumption of mattresses in China from 2013 to 2018

With the consumption increasing fourteen-fold since 2002, the mattress market in China is now gradually entering a mature stage. With the CAGR of 17.77% for the last decade, China’s mattress market surpassed that of the United States in 2015, becoming the largest in the world.  

International mattress brands are premium players in China

Data Source: Qianzhan, Competitor Overview of the Chinese mattress market

In the Chinese market, consumers generally perceive the imported mattress as premium. Thus, the high-class competitors are represented by international brands. The leading competitors in the Chinese market are the middle-class competitors, which are the domestic brands. The low-class competitors consist of generic brands from local mattress manufacturers.

Data Source: Chyxx, Import of spring mattresses, bedding and similar supplies in 2017

The Chinese mattress industry  focuses on export instead, the trade surplus between the import and export of mattress reached 1.7 billion dollar in 2019. When it comes to imports,  China imported the most bed supplies from Thailand.

Data Source: Qianzhan, Market share of the mattress industry by brand in 2018

The market concentration is low in this market and there is no obvious leading brand. Based on China’s mattress market share in 2018, half of the top twelve brands, including the top four brands are domestic brands. Foreign brands that are outstanding in the market are from the United States, accounting for five out of the top twelve brands.

What do Chinese consumers look for in a mattress?

China’s economic development head lead consumers to reflect on the quality of regular household items, which is known as the consumption upgrade. Growing awareness on the improvement of living standards has prompted people to have specific requirements for their sleeping environment, mattress quality and appearance. The emergence of mattress production technology can meet the needs of a variety of people. To succeed in this market, it is crucial to understand Chinese consumers’ preferences, spot their needs and provide value adds-on service to win the consumers.

Key factors on mattress purchase decision

Data Source: Wenjuntech, Key factors that matter to consumers on purchasing mattresses

While purchasing mattresses, consumers mainly focus on the material and sustainability. In China, sustainability is not only an environmental issue, but there is a perception that it has less pollutants. After price, brand name and after sales service, comfort and softness are less important to Chinese consumers.

Data Source: Wenjuntech, Key factors that prevent consumers from purchasing mattresses

About 80% of the respondents stated that the negative review on the mattress brand would affect their purchase decision. This is what brands need to watch out for when it comes to Chinese negative reviews: 40% of the respondents identified ‘air impermeability’ as the main problem, which would lead to skin disease. ‘Low-quality spring’ and ‘formaldehyde’ are the following problem identified by the respondents, accounting 41% of the total responses.

After sales services are important to many Chinese mattress consumers

Data Source: Wenjuntech, Consumers’ favorable additional services on purchasing mattresses

Data Source: Wenjuntech, Consumers’ perception on cleaning mattresses

Products and services are indivisible. Home delivery, free installation, free return, free cleaning and removing mites are about equally distributed as preferred as additional services. Digging deeper, more than a half consumers value regular mite removal. However, the process is too complicated to consumers to do it by themselves. Regular cleaning services would be a powerful selling point in China’s mattress market.

Common mattress materials in China

Latex mattresses are the top selling mattress in China. Consumers appreciate that are porous and have high elasticity, they are highly sought after because of their ability to conform to the curves of the human body and improve sleep quality. In the first half of 2020, latex mattresses made 1.3 billion RMB in sales on Tmall and Taobao.

Palm mattresses are also very popular in China, making over .5 billion RMB in sales on Tmall and Taobao during the same time period. Palm fiber is woven with good flexibility and moderate hardness, but natural materials may have worms or mildew.

Spring mattresses also made around .5 billion RMB in Tmall and Taobao sales during the first half of 2020. However, negative reviews of spring mattresses suggest brands need to watch out for having springs collapse.

Future growth depends on how often consumers replace mattresses

Changing in consumer perception

The results of a study by Kingston University in England showed that a mattress have an average of at least 15,000 bed mites and dust mites. The number of bacteria on a double-bed mattress that has not been cleaned in three years could exceed 1 billion. And experts suggest changing mattresses every five years. It is the frequency of changing the mattress which will lift the market from maturing to mature. As of 2020, a majority of Chinese mattress consumers do not change their mattress as much as recommended as a research shows that 50% of Chinese consumers only change the mattress when it is broken. It is much lower than that of the United States. In the United States, 50% of consumers stated that they generally change mattress once three years and 30% of consumers stated that they won’t use the mattress for more than three years.

The China’s mattress market is dynamic as changes in consumer perception are constantly evolving. With the increasing awareness on living standard and sleeping quality, the frequency of mattress replacement is speeding up and will be a driver of market growth once market penetration is at the max.

Functional mattress: mattresses matter for high quality sleep

In light to the research in 2018, only 25% of post-90s Chinese have acceptable sleeping quality, above 75% respondents stated that they had poor sleeping quality. Around 20% of the respondents chose to change mattresses to improve the quality of sleep, and 27% of them showed interest in intelligent mattresses.

Following that, post-90s consumers are the main consumers in the mattress market in China, the concept of upgrading sleep quality is expected to trend and prompt the sales of mattress supplies. Functional mattresses working on improving sleeping quality would be able to catch this market opportunity.

Rental housing renovation trends

With the increase in home ownership costs and government policy support, the rental industry has entered a new era of development. Data show that the rental population in Chinese service rental market has maintained steady growth since 2017, with 210 million people in 2018, and 220 million people in 2019, 220 million in 2020, and 240 million in 2022.

Renovation of rental housing is trending in China, as demonstrated by frequent hot discussions on Weibo. Mattresses are seen as a key component of improving the living quality. Therefore, purchasing new mattresses for the rental houses is spurring. When a question raised in Zhihu about whether it is necessary to buy a new mattress for apartment rentals, the top answer stated that people should not settle for uncomfortable mattress and get a new mattress for quality sleep and quality life.

Data Source: Weibo: hot topics related to rental house renovation; Zhihu: Is it necessary to purchase a new mattress for the rental house?

Learning points

As the size of mattresses market is growing in China, and the trend for premiumization is beginning with after sale-services and sustainable material. The market is lacking an obvious leading brand, hence there is potential for an existing brand, or even a market entrant, to step up. Companies need to pay attention to the consumers’ needs and find the way to understand and satisfy them.

Author: Dongni He

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This article China’s mattress market: springing up with new demand is the first one to appear on Daxue Consulting - Market Research China.

China is also an exporter of coffee. In 2017, China exported $237 million of coffee beans. As of June of 2019, China has exported around 1.4 million 60-kilogram bags of green coffee beans. Export of green coffee beans shows a stable growth, as quality is improving.

Data Source: qianzhan, China’s export of coffee beans

On-trade sales of coffee mainly go through three types of establishments: coffee shops/cafés (independent and chained), Internet cafés and fast food restaurants. Currently, both in the instant coffee market and China’s coffee shops chain market, foreign brands occupied a large amount. It happens due to lack of domestic coffee brand in the coffee bean market in China.

The coffee commodity chain in China is still developing

Dry processing is simple to operate and is the most traditional and cheapest coffee bean processing method. It is the most common method in China. The deep processing of coffee includes roast and ground coffee processing. This way is the most suitable for making espresso, which is the type of bean most used in Chinese coffee culture. With the rapid growth of coffee beverage consumption, many manufacturers across the country are currently actively working on the coffee processing industry. Such companies as Dehong Hougu Coffee Company, Hainan Lishen Company, Baoshan Orchid Company, Yunling Coffee Company are focusing on building commodity chain that will let them to be competitive in the coffee bean industry in China.

The assistance of Nestle and Starbucks

China’s primary coffee growing region is in Yunnan Province, accounting for 98% of production in the coffee bean market in China. Nestle had established agricultural assistance services across Yunnan and has since been the largest single buyer. Another international lead firm, Starbucks, followed Nestle by established its own sourcing operation in Yunnan in 2009. Nestle operated several collection stations across Yunnan, while Starbucks also established a smaller-scale farmer support center.

Source: ResearchGate, China and the changing economic geography of coffee value chains, ‘Main coffee production areas in China’

Starbucks plans on roasting facilities in China

There are few roasters in China compared to in Western coffee-consuming countries. However, their number is growing due to the increasing popularity in coffee and demand for more specialty coffee companies. There are big commercial roasters in China that focus mostly on mass production for instant coffee. Alongside this, there are also single-shop roasters that often aim for higher quality and roast on a small scale.

In 2020 Starbucks China announced that it will invest about $130 million in China to open a roasting facility in 2022. The project is set to handle Starbucks’ largest roasting capacity, including a roasting plant, warehouse, and distribution center. It will strengthen the coffee industry in China. Beyond roasting, once in operation, the park will integrate green coffee bean warehouse management and processing. With plans to co-locate a highly automated and “intelligent” distribution center that will become the heart of the Starbucks distribution network in China. The facility also will serve as a training ground for coffee roasters.

Coffee bean market in China is entering a stage of rapid development

Increased demand for coffee beans

The demand for coffee in the Chinese market grew in the past five years.  At present, the Chinese coffee market is entering a stage of rapid development. According to statistics, the per capita coffee consumption in China was 6.2 cups in 2018. In 2019, China’s per capita coffee consumption was about 7.2 cups. As coffee consumption is rising in China, the demand for coffee beans will also grow.

Data Source: Prospective Industry Research Institute, ‘China’s per capita coffee consumption’

In 2019 the most consumed coffee types among coffee drinkers in China  were single origin, espresso (including espresso drinks like Americanos and lattes), and cold brew. That is why espresso beans in China make up a large part of coffee bean exports to China.

China’s coffee bean imports have been on an upward trend

In the past four years, China’s coffee bean imports have been on an upward trend. From January to November 2017, China imported 110,000 tons of coffeebeans.

QYResearch predicted that coffee bean export to China will grow to 124,000 tons in 2020. In terms of origins, the biggest supplier of coffee to China is Vietnam. In 2018 the export volume of green coffee beans to China was 84,300 tons, and the export volume of roasted coffee beans and instant coffee powder was 28,800 tons. The slight decline happened in 2018 has rebounded in 2019.

Data Source: Zhiyan Consulting, ‘Exports of green coffee bean and roasted coffee bean to China’

Vietnam, Indonesia, Malaysia, Brazil, and the US are the key countries in coffee bean exports to China. In 2017 Vietnam accounted for almost half of all imports. Based on these origins, and information from external sources, Robusta is the most common imported coffee to China. Robusta is also known as espresso beans in China. However, imports from Colombia and Central America have been increasing significantly in recent years, growing at over 25% per annum. Now it makes up around 5% of the total.

Data Source: International Coffee Organization, ‘Coffee bean exporters to China’

Coffee bean industry in China: the quality is improving

China produces 138,000 metric tons of coffee beans annually. However, although China’s coffee production is high, it is difficult to directly associate coffee with China. This is because the coffee beans in Yunnan used to be of low quality, mostly used as raw materials for instant coffee. However, China already can produce good quality coffee beans.

Yunnan coffee plants is the key producer of coffee bean in China

A French missionary brought coffee to Yunnan province in the late 19th century, marking the crop’s introduction to China. Nestlé also arrived early in Yunnan to encourage the cultivation of coffee. Hogood Coffee, the largest domestic instant coffee maker, appeared in 2007. It has been responsible for cultivating much of the coffee in the Dehong region. In 2013, Yunnan Coffee Traders became the region’s first dedicated specialty coffee exporter. In 2018 they were the largest exporter of Yunnan specialty coffee in China. Much of the Yunnan coffee is exported to Germany and Japan.

Other centers of coffee bean market in China are Fujian and Hainan. Fujian and Hainan mainly grow Robusta. However, the domestic production is too small and these espresso beans in China are usually coming from Vietnam.

Coffee bean brands in China

Illy: A market leader in China

Italian roaster illycaffé has been in China for 15 years, in that time establishing itself as a clear market leader in the coffee bean market in China. It accounts for 30 percent of the imported roast and ground coffee segment in China. With a long and celebrated history as an innovator in the coffee industry, illycaffé is perhaps most famous for its signature blend of nine varieties of Arabica coffee selected from the best harvests in the world. Along with the introduction of new products, illycaffé is taking its products to the market through several channels. The company works with more than 1,000 clients in China in the hotel, café, and restaurant segments. In addition to this, the company’s Italian-style café franchise Illy Caffe has three outlets across the country, and there are another nine illycaffé retail outlets providing full range of Illy products – beans, ground coffee, and capsule machines.

Lavazza: Premium coffee grounds in China

Yum China Holdings has entered a joint venture to develop the Lavazza coffee shop concept in China. As the first step, a Lavazza flagship store in Shanghai, has opened its doors to customers in Asia. Recently, the Lavazza Group has embarked upon a process of international development aimed at tapping into new markets. Meanwhile, Yum China has made encouraging advances into China’s coffee market. In 2019, this brand sold 130 million cups of coffee to Chinese consumers. More than just the classic Italian espresso, Lavazza employs a variety of roasting and extraction techniques, introducing unique coffee creations to China for the first time. Bel Paese Coffee is an exclusive line-up created for the Chinese market, offering a “unique journey of tastes from across the different regions of Italy.”

Rwandan coffee enters China’s market

Rwanda was the first African nation to join the Alibaba-led Electronic World Trade Platform. Organized by the Alibaba group, the online event aimed at promoting Rwandan coffee which is available on the Chinese e-commerce market. Event featured coffee from Gorilla Coffee – a brand from Rwanda Coffee Company, promoted to about 20 million fans that were following online. By the time of buying, up to 3000 pieces (about 1.5 tonnes) of the coffee were bought online in a space of about 1 minute. Besides, as a result of the agreement, Rwandan coffee is available on Alibaba’s platforms. Coffee lovers in China also can access the product through Tmall.

Prospects of the coffee bean market in China

Due to growing middle class in China and the popularity of coffee among younger generation, coffee bean industry in China has a great potential. Forecast predicts that the average annual growth rate of coffee consumption in China will reach 15% in 2020. 

Data Source: QYResearch, ‘Annual growth rate of coffee consumption in China’

With the improvement of the living standards in China and the recognition of coffee culture, it may stimulate domestic coffee consumption. Forecast shows that the size of China’s coffee market will reach 217.1 billion yuan in 2025.

Data Source: qianzhan, “China’s coffee industry market size forecast’

As the size of coffee market in China is growing, it offers boundless potential for coffee bean industry. In the future China can become a major coffee-consuming country. Due to the growing gap between supply-demand in domestic coffee market, foreign producers increase a variety of exported coffee beans to China. Furthermore, with the constant improvement of domestic living standard, the consumption and demand of coffee will expand rapidly.

Learn from a coffee shop entrepreneur in China

See our report on the tea market in China

This article The Coffee bean market in China: Where does China import beans from? is the first one to appear on Daxue Consulting - Market Research China.

With a market size of 75.7 billion RMB in 2016, China is a rising market for music education. This can be attributed to government support, China’s booming economy, and the upgrading of citizens’ consumption. Another factor not to be overlooked is the importance of music certifications to Chinese families.

Western instruments account for more than half the musical instrument market in China

Musical instrument education is one of the major segments of the music education industry. Since the economic openness from the late 1990s, China has gradually been influenced by western culture, as a result, western musical instruments now account for more than 59% of the market in China. This also coincidences with the fact that three of the top four musical instruments in the music education market are western: piano, guitar and ukulele.

Obtaining certification is the key driver for music education

The key driver for Chinese parents to encourage their children to learn to play a musical instrument is passing the music certification tests. According to the industry report, more than 90% of the market output comes from the training for graded tests. Although most Chinese parents do not support their kids to apply for art colleges, they still wish their kids could learn some artistic skills, for example, music instruments. The grading test certification is proof of their kids’ success and a test of the teacher’s capability. Having high-level certification is also a stepping stone for entering better schools or universities. For junior/senior high schools, students with music instrument certification could get extra marks to compete. For the entrance examination for college (高考), universities provide a special channel for these students with high-level artistic skills. This is the reason why music instrument education is so popular and those instruments in the test list (the certification will only be available for those music instruments listed in the test system) are more favored by the market. For the long-term, people with the certification and the skill can find jobs in music education.

Consumption upgrading: Chinese households are willing to pay more for musical instruments

By looking at the urban households’ annual consumption by category, Chinese citizens are spending more on recreation and cultural services and equipment (including musical instruments). The amount has already reached 832 billion RMB in 2010 and is estimated to reach 3.54 trillion RMB in 2020. This indicates that people are more willing to pay for their music-related entertainment. Combining with the consumption upgrade, there is a trend that Chinese people would consume higher-end products.

Source: National Statistics Bureau

The future market potential is in tier-2 and tier-3 cities

Apart from the increase in expenditure of music-related products, the expansion of the middle class also shows new market development is in tier-2, 3 cities, and is moving from the coastal regions to inland China. This doesn’t mean that there is no potential in the most developed areas, but rather these markets are becoming saturated with high-level competition. For now, Beijing, Shanghai and Guangdong are the three key regions for sales of music instruments, the number of music instrument schools and their economic factors. However, for music education or instrument sales, the market has already shown the trend towards inland China. For example, in recent years, more kids from more remote provinces have participated in the Shanghai International Youth Piano Competition. And their performance is as good as the ones from developed provinces.

Source: McKinsey Quarterly

The four most popular musical instruments in China: piano, guzheng, guitar and ukulele

Piano, guzheng, guitar and ukulele are the four most popular musical instruments based off the frequency of searches on Baidu. The standardized test for piano started in 1993, and it is the western instrument with the longest history in China. There are currently more than 30 million children in China are learning to play piano, and with an annual growth rate of around 10%. In Chinese parents’ mind, playing the piano is a symbol of elegance and dignity. Guzheng, which is a type of zither, is the most popular traditional Chinese music instrument for education. The first reason is that guzheng is easier to learn than other traditional instruments, the other reason is that guzheng, with more than 2,000 years of history, is a typical representation of Chinese music culture. By 2018, there are more than 5 million people learning guzheng. As for guitar and ukulele, their targeting older students, mostly adults. The lack of a standardized certification is the main reason that fewer parents would pay for their kids’ guitar/ukulele class. However, because the guitar and ukulele are easy to learn and portable, these 2 instruments have an even larger market size than guzheng.

Guitar and ukulele are gaining more attention in recent years due to the popularity of music TV shows

Baidu index is a figure which shows the popularity of certain searches on Baidu. The graph below illustrates that generally, all four instruments are gaining more attention in the market. Although guzheng is the top Chinese traditional instrument, its index is the lowest compared to the other three western ones. China is getting more open to western culture and meanwhile is integrating the music culture. For example, Zhang Chao, a Chinese composer, has added Beijing opera element into a piano score. Or on the contrary, Wang Zhongshan, guzheng artist, has played pop music with guzheng. Among the 4 indexes, ukulele’s is the highest since 2015. Ukulele is a new instrument for the China market and has only been receiving the public’s attention for a few years. However, thanks to music TV shows like “the Voice of China”, people have become familiar with the ukulele.  The guitar is also gaining popularity due to the popularity of music TV shows and festivals.

Baidu index of keywords: piano, guitar, ukulele and guzheng

Piano market is mature: demand is for high-end brands

For the piano market, the best-selling brands online are YAMAHA, Bruno & Sons, Carod, Zhujiang (珠江) and KAWAI. All these brands are middle- or high-end, 4/5 are foreign brands. According to the sales data for the last 12 months, the average price of piano sold is around 12,000 RMB/unit, which shows that the piano market is already a mature market for high-end products. There is a sales peak in August because students start their summer vacation then and have more time for lessons. The sales volume is extremely high in October 2017, which is caused by a company called Yun Fei piano’s renting business. They have successfully rented around 6,500 pianos within one month. However, this renting business also met some difficulties. For example, some consumers refuse to return the piano, which has led to many lawsuits. This phenomenon demonstrates that there is a huge market for renting service while the relevant regulations are not settled to protect the benefits of leaseholders.

Source: taosj.com

From the summary of people who mentioned the keyword “piano” in Baidu searches, notable inland regions such as Henan, Hubei and Sichuan are highlighted on the map. Classic music is these people’s common interest, meaning the mainstream music style for piano playing is still classic music. “#piano score#” is the most popular topic among them, they are looking for and discussing scores. This implies a market potential for online music scores.

The most famous pianists in China: Lang Lang (朗朗), Li Yundi (李云迪)

Lang Lang and Li Yundi are the two most famous pianists in China. People like to compare the achievements of them. The most relevant topics people search on Baidu when searching “Lang Lang” are Li Yundi, piano, score and many video playing platforms. The last one might imply that video playing platform is one of the key information sources for people interested in piano. This could be considered as a marketing channel for music education or instrument sales.

Lang Lang, one of the most Chinese famous pianists, messager de la paix. He was also awarded Bernstein art achievement award in 2002.

Li Yundi, a talented pianist, has been awarded the golden prize in the International Chopin Piano Competition when he was 18 years old. Before then, it had been 15 years that no one got the prize. He is the “benchmark” or the “idol” for kids learning piano. Because of this, people are stricter about his mistakes, so many related topics in 2018 are still about his mistake in one concert in 2015.

Li Yundi, one of the most Chinese famous pianists. He was the champion of the 14th International Chopin Piano Competition in 2000.

Guzheng is a market solely for domestic brands, while foreign companies can export raw materials to these brands

For the guzheng market, like this a traditional Chinese instrument, all the vendors are domestic brands. Yangzhou is the base for guzheng manufacture. This would be a market difficult for foreign companies to enter. From the social listening of guzheng on Weibo, it can be concluded that TV dramas have a strong influence on people’s interests and preferences. Brands could sponsor or partner with some TV dramas with musical elements.

China Conservatory of music is one of the centers of guzheng culture, also is the center for other kinds of music studies. Normally, those music instruments stores and schools are located near these conservatories of music, where the key offline distribution locations are. For example, the famous music street, Fenyang Road (汾阳路), in Shanghai is on the street where Shanghai Conservatory of music is. There are 39 music instrument schools and around 30 stores.

Guzheng is listed separately from other traditional Chinese instruments in Chinese Golden Bell Award for Music, which shows its importance and a large base of learners. The Chinese government is also encouraging the development of traditional culture. This would influence the trend for future courses set up in schools. This might be a negative influence on western music education’s business in China. However, there are still other business opportunities. For example, exporting the steel wire of guzheng strings or the paint for those traditional instruments.

Famous guzheng artists in China

Wang Zhongshan (王中山), professor of China Conservatory of Music, president of guzheng association under Chinese Musician’s Association. He has created many new skills to play guzheng, contributing to the development of the modern guzheng playing system.	Yuan Sha (袁莎), professional guzheng supervisor of China Conservatory of Music, head of Zhong Zheng Art Troupe. She has traveled to more than 30 countries for culture exchange performance and has recorded a one-year-long guzheng educational lectures for CCTV.

Most guitars sold online are low-end, an opportunity for high-end brands is in offline distribution

For the guitar market, most of the guitars sold online are low-end. There are basically 2 reasons behind this. First, beginners would prefer to buy cheap guitars, and they usually do so online. Second, for those intermediate and expert players, they would like to collect limited edition on second-hand e-commerce platforms or in offline channels. Offline distribution is still the key for music instruments especially for high-end brands, although e-commerce is expanding fast these years in China. Meanwhile, domestic brands have already taken low- and part of the middle-end market in the guitar industry, the opportunity for foreign brands is not to compete with the price but the quality and user experience.

Based on social listening on Weibo, rock and heavy metal music are the main music styles for those people interested in guitar topics. Although classic guitar is listed in the grading test system, this is still not the mainstream for guitar culture, also because it’s difficult to learn. Besides those KOLs within the guitar industry, young idols who play guitar have a strong impact on a wider range of potential/existing learners. Sichuan province with the fourth largest population and fast developing economy is the inland province with the highest potential for music education. The starting point could be Chengdu, the capital city of Sichuan.

Famous guitarists in China

Liu Yijun, used to be the guitarist in the band “Tang Chao (唐朝)”, is recognized as the greatest guitarist in North China of his era. He is also the first Chinese guitar player who can press the keyboard from the back of the neck. Li Yanliang (guitarist of Chao Zai Dynasty Band), another famous guitarist in China, who has been awarded Best Music Arrangement Award in China original music award. People care a lot about their daily movements, their performance. Besides these guitarists and bands, there is another important KOL in the guitar industry, Jiang Wei. He is the CEO of GuitarChina, the largest BBS platform in the guitar market. Along with BBS, Guitar China also has its own online and offline distribution channels. They also have official accounts on all key social media platforms for marketing. GuitarChina has developed a partnership with most of the brands in the guitar industry and hundreds of music education schools in China. This company would be the touchpoint for marketing in this niche market.

Liu Yijun (刘义军), the first metal rock guitar player in China, the first Chinese guitar player who can press the keyboard from the back of the neck.	Li Yanliang (李延亮), has been playing guitar for more than 30 years, been awarded Best Music Arrangement Award in China original music award.

Besides music TV shows, music festivals are also the stimulator for guitar culture

As mentioned before, music festivals have brought popularity to guitar and pop music. The number of outdoor music festivals in China has dramatically increased from 24 in 2007 to 148 in 2014. And the number of audiences has doubled from 2011 to 2014. The most successful music festivals in China are Strawberry music festival (草莓音乐节) and Midi music festival (迷笛音乐节). This is where people are inspired by new trends in the music industry. Besides sponsoring, brands can also rent a booth in the inside bazar to display and sell products.

Source: Daxue Consulting

Ukulele is new to China, although with high popularity, still a market for low-end products

For the ukulele market, most of the products in China are low-end. This is because for China market, the ukulele is an instrument even younger than guitar, meaning a majority of the players are beginners. Besides, the ukulele is not regarded as a formal music instrument, firstly because that it is not in the grading test system, secondly, because that ukulele is more like “little guitar” for the Chinese market. Although ukulele is new to the China market, China is already the main producer of this instrument and is estimated to produce around 90% of ukuleles in 2022. Middle- and high-end brands have already entered China’s market, the next step is to educate consumers to accept higher-end products.

The screenshot shows the related topics people searching for then search the keyword “ukulele”. Half of the most related topics are learning material/skills for beginners, implying that most people tend to learn ukulele by themselves. Two reasons behind this: firstly, the ukulele is easy to learn, especially for those who already play the guitar; secondly, people play the ukulele more for music initiation or entertainment, they are not willing to invest heavily on this. The other popular topic is about the difference between ukulele and guitar. For the very beginning, it’s a marketing strategy to sell ukulele as “little guitar”, but for a long-term strategy, brands need to marketing ukulele as an independent product.

The existing market for ukulele is still the coastal region and people who are interested in ukulele don’t have a clear preference for the music style. The domestic brand, Tian Lai Cun (天籁村), has conducted the business model of “sales + education”, which is the common model for music instrument education in the current market. The ukulele summer camp organized by them is the most popular topic among those people. The “bundle sale” of musical instrument and education is an effective marketing strategy to increase consumer stickiness.

Famous ukulele players in China

Liu Zongli is one of the most famous ukulele artists in China. He is the spokesman of an aNueNue ukulele. This brand covers middle- to high-end products. They also provide educational classes on a live-streaming platform: Meipai (美拍).  Liu Zongli has also provided teaching material to CCTV, which assists the spread of ukulele culture. The actual boom of ukulele started from the rising of music TV shows like “the Voice of China”. Liu Weinan, a participant in this show, introduced ukulele to the public by playing “lemon tree”.

Liu Zongli (刘宗立), one of the most famous ukulele artists in China, spokesman of aNueNue Ukulele. He has more than 4,000 students and has provided teaching materials to CCTV.	Liu Weinan (刘伟男), has participated in the Voice of China Season 4. He was famous for his performance in this show by playing a ukulele. This also increases the exposure and recognition rate of ukulele in China.

A new opportunity in the music education market: intelligent instruments

Intelligent music instruments are the trend in the industry. First, this follows the government’s guide of “Artificial Intelligence + education”, which encourages to the conversion of AI technology to the education industry to compensate for the limits of teachers in the current system. Secondly, intelligent musical instruments could ease the stress of high expenditure on instrument consumption and classes. For example, one high-end intelligent piano costs 7,000 RMB, which could teach you the entry-level knowledge about playing the piano. If you buy a middle-end traditional piano (5,000 RMB), attend training class (200 RMB/class) and have a personal tutor to monitor your practice (50 RMB/hour), in total that is more than 10,000 RMB. Thirdly, intelligent instruments could guarantee a systemic and standard training process. This avoids the problem brought by changing teachers. The final benefit of an intelligent instrument is that it could monitor your daily practice at any time, which saves the money for hiring a personal tutor.

Popular intelligent instruments in the market: piano, guitar, ukulele

There are three popular intelligent music instruments in the market already: piano, guitar, and ukulele, coincidently are the three top instruments in the education industry. The main principle of this kind of instruments is that the LED lights on it are linked to an APP on tablets and mobile phones. Students can follow the movement of those lights to play. The ONE is the most mature brand for intelligent piano, whose spokesman is Lang Lang. “Learning piano with your family” is also their selling point. Popular and Populele are designed by a technology company based in Beijing and were awarded the iF Industrie Forum Design in 2017. The target market for intelligent music instrument is still limited for entry-level education, while this is already a huge market for development.

The ONE intelligent piano Spokesman: Lang Lang	Populele by Popular Inc	Popular by Popular Inc

“Side-products” of music instrument education: instrument maintenance, second-hand sales, electric teaching material, personal tutor, music competition

There is also great potential for those “side-products” of music instrument education: product maintenance, second-hand sales, teaching material, personal tutor and music competition. Maintenance service is a long-term business for musical instrument sales and education. For example, for the guitar market, even the in-store staff is not professional about the maintenance knowledge of strings. As for the second-hand market, from the Baidu index, it can tell that this market has expanded dramatically since 2015. This indicates a huge market for imported second-hand pianos, especially for high-end ones. Along with the development of intelligent music instruments, electric teaching materials is also the trend in the education market. Tier-1 cities have already started programs for testing the performance of electric teaching material. For those kids who use traditional pianos, they would still hire personal tutors to monitor their daily practice if the budget allows. This market is at least twice larger than a formal teacher. For example, a kid will only attend piano class 1-2 times/week, but he/she needs to practice 3-4 times/week. The music competition is getting popular and paid more attention to the market in recent years, including local ones and national wide ones. This is a chance for kids/players to present their skills, to prove their talent or add experience on their CV. This is a marketing channel for more exposure rates and high-level reputation. Brands could sponsor the competitions financially and provide free products as gifts.

Daxue Consulting has done thorough research on instrument markets in China

Daxue Consulting is ready to help you understand the musical instrument market in China and give you all the data you need to be prepared to make critical decisions—regardless of whether it is the actual market entry or the potential success of your products on e-commerce websites. We are also able to get opinions from a large number of respondents so that you really know what the people are thinking and feeling. Sensory research, in particular, is one of our strengths.

We have already conducted research projects for our customers on very specific parts of the musical instrument market in China, involving the following points:

• An overview of the specific market segment, with market drivers and market trends as well as opportunities and challenges;
• Competition mapping, including five case studies focusing on similar companies in the industry;
• Online analyses using the Baidu Index and most popular e-commerce websites;
• Geographical areas analysis, highlighting good places to start a business, and;
• A detailed customer analysis.

We used various methods to collect data and reach our conclusions. In-depth interviews with brand managers and retailers as well as distributors were one important part. Focus groups with customers and online surveys proved useful too. Other methods included desk research, in-depth interviews with retail consultants, benchmarking, and a corporate financial reporting evaluation.

Contact our project manager who worked on the musical instrument market in China by dropping an email to dx@daxueconsulting.com.

This article The Chinese music education industry’s main driver: grades and certifications is the first one to appear on Daxue Consulting - Market Research China.

The skincare market in China sales volume reached 26.5$ billion, representing 50% of the total cosmetic market’s sales revenues in 2017 – twice as much as the world average. Skincare products in China are seen as essentials among Chinese women, and increasingly more so among men. In 2017, the sales volume of skincare products in China amounted to 50% of all sales in the Chinese cosmetics market.

How COVID-19 made skincare a focus of China’s cosmetics market

Data Source: NetEase Positioning & CTR; McKinsey, What Chinese consumed more of during the coronavirus

Skincare products are gaining popularity over make-up

The cosmetics’ sales volume in China declined by 29.9% in February 2020 compared to February 2019, but the skincare segment was impacted the least. Based on social listening, during the outbreak, people consumed and talked more about skincare products than cosmetics. Netizens enthusiastically shared their skincare experience at home during COVID-19. This social media listening combined with sales data shows upcoming trends in China’s skincare consumption.

Data Source: SCMP; sycm.taobao.com, Alimama.com, Sales volume of skincare products on Alibaba during COVID-19

So long as people wear masks, skin repair will be an important skincare function

Due to the damage from wearing face masks for a long time, “skin repair” functions had become a hot keyword among Chinese beauty consumers. The sales of skin repair focused products increased doubled in between December 2019 and February 2020. Some Weibo and Xiaohongshu users said they want to improve their skin condition and leave a good impression when they go back to work.

‘Sensitive skin’ is another keyword for brands

Also as result of wearing facemasks and frequently using disinfectants, many Chinese are finding they have sensitive skin, and desire products that can help with sensitivity. Brand messages even include ‘repairs damage from face masks’. For example, sales of Avène, a French skincare brand focusing on sensitive skin, grew in China. This includes an importance of anti-irritating and soothing properties.

Data Source: Taobao; Jumeili; Xiaohongshu, Sales volume of Avène on Taobao

Increased preference for healthy and natural ingredients

As China recovers from COVID-19, health and safety are now key concerns of more Chinese people. This will likely inspire the beauty industry to focus more on products with natural and healthy concepts. 22% of beauty consumers report being concerned with whether skincare products have natural ingredients, while only 12% report brand name being a concern.

Data Source: Jumeili, What beauty consumers will care about after the coronavirus

Changes in purchasing behavior in the Skincare market in China

For years, Chinese skincare consumers have traditionally been price sensitive and therefore focused on the mass market segment. This gave skincare market in China a pattern made of high market penetration (95% in 2016) and a particularly low spending per capita compared with other markets.

However, since the last few years, skincare in China has been going through declining market penetration. Since then, the skincare category has started to become more quality-driven vs price-driven.

Chinese skincare consumers are spending more

Chinese women have been paying more attention to their skincare habits over the past few years. Three main points can be highlighted for 2017 in the Skincare market in China:

1. 90 percent of female consumers increased their spending on skincare products in China.
2. 58 percent of Chinese female skincare consumers upgraded their purchasing habit by switching to the favorite brand’s premium product line.
3. 36 percent of Chinese female skincare consumers left their favorite brand behind and started purchasing more expensive brands.

The willingness to invest more money into better quality and, therefore, more premium products has considerably increased. Spending more money also goes along with sharpening product knowledge to ensure they choose the option that best fits their expectations.

Market trends and drivers in the Chinese beauty market

Skin care products in  China

Serums as a complex product that Chinese consumers have yet to master

Serums in China generates the largest number of Baidu search results. Baidu searches tend to focus on the role and function of serum, showing local consumers have limited knowledge but great interest in serums. Due to the complexity of such product (easily mixed-up with essence and boosters), Chinese skincare consumers seek to understand the product functions and how to properly use it in their beauty routine.

Face masks are an increasingly popular item among skincare consumers in China

The Baidu search for face masks comprises both sheet and cream masks, two popular products among the local audience. Results are composed of both product recommendations and product tutorial content, which demonstrates different levels of knowledge about the product.

Face cream is already well-known Skincare product in the Chinese beauty market

Search results for face cream in China are focused on product recommendations and face cream’s sales ranking, showing consumers select their products on a rational basis. Lancôme and Estée Lauder appear in the relevant search results for face cream, showing top-of-mind awareness among Chinese consumers on this product segment.

The top Chinese skincare brands

Chinese skincare brands’ presence on the Chinese skincare market has significantly grown over the past few years. They are now gaining market share over long-established foreign players such as L’Oréal Paris and also boast a better market share growth. Local brands implement a more aggressive PR strategy involving brand ambassadors (Singer Jay Chou for Pechoin, TFBoys for Chando) and TV show endorsements (The Voice of China for Pechoin, If You Are The One for Kans, Street Dance of China for One Leaf) to quickly boost their awareness among their target audience.

Top 6 Chinese skincare brands in terms of market share in 2017:

1. Pechoin – 4.5%
2. L’Oreal Paris – 3.3%
3. Chando – 3.1%
4. Olay – 2.8 %
5. Kans – 2.7 %
6. One Leaf – 2.0 %

Male skincare: A promising market segment

The male skincare segment grew by 18.5% in terms of sales volume between 2013 and 2017. According to a recent study conducted by Weibo, male users’ interest in skincare products is growing so fast that male consumers nearly double their spending on skincare products every year.

Besides, for male skincare, face cream is the most popular SKU among Chinese men, but the face mask is quickly catching up.

Most common marketplaces to buy skincare products among Chinese consumers

In China, consumers tend to buy skincare products mainly from such marketplaces as an exclusive store, supermarket, online, or agencies.

Also, the information channels for skincare products in China shows that an increasingly complex purchasing decision process is basing on a plurality of sources. Product safety is a key concern for local consumers when it comes to purchasing skincare products. In fact, 90% of them admit going through extensive research before purchasing any product. As a result, they rely on an increasingly complex data collection process based on a wide range of online and offline channels.

Moreover, Chinese consumers tend to favor product reviews shared by market experts and other consumers. This is the reason why online channels, where consumers can access specialized KOLs reviews (e.g., BBS, official WeChat accounts) and other consumers’ comments (e.g., on social media platforms and 3rd party platforms like Tmall), have such significant influence on the Chinese consumer’s decision-making process.

Tighter regulations as the Chinese skincare market matures

On January 10th, 2019, the China National Medical Products Administration (NMPA) released a report tightening the supervision and inspection of cosmetic products with any medical-related terms. To avoid confusion between cosmetics and medicines/pharmaceuticals, any cosmetic packaging or specification is forbidden to bear curative effects, promoting medical effects, or using medical terms. Any product registered as “cosmetic product,” but presented as a cosmeceutical product will be considered illegal.

Digital marketing for skincare products in the China

Online promotion combined with social channels is essential for brands to achieve success in the Chinese skincare market

China has 1.39 billion people, with 820 million Internet users, accounting for 59% of the total population, and 788 million mobile terminals, accounting for 57% of the population. With a large number of internet users in China (more than half of the total population), online communication is becoming a necessary branding and promotional method for cosmetics brands in China. In recent years, the amount of internet users has grown steadily, and the amount of social media users has grown significantly. The online growth rate of the beauty industry is 11 times that of the offline growth rate.

What’s more, top Chinese social media platforms drive a significant amount of online traffic, such as WeChat and Weibo with hundreds of millions of active users per month. Online video platforms such as IQiyi, Tencent and Youku also carry huge traffic that can convey information to a large audience. Live-streaming and short video are new rising channels that are also effective. These platforms give brands a great opportunity to expose their brands and products.

Skincare market in China: development of Chinese social media and the rise of KOLs

KOLs play a crucial role in the marketing of beauty-related products in China. The interactive communication of mobile social platforms enables brands to establish a connection with consumers more effectively and pertinently, and KOLs serve as a bridge to guide communication among consumers in the Skincare market in China. When KOLs post on Weibo, consumers buy immediately at a conversion rate of 1.5%. 56% of the influence value in the Chinese beauty market is from KOLs and only 19% from Chinese social media.

Successful KOL promotion case in China, SK-II: A celebrity and fashion KOL crossover

Leveraging super topics (a specific section of Weibo which operates like a forum and allows brands to monitor the most popular hashtags and follow conversations based on topics) with the influence of celebrity and vertical KOLs is a method by which it is possible to greatly enhance brand awareness and generate large exposure to consumers, getting higher view volumes through deep interactions with social audiences.

SK-II’s promotion activity in 2017, the super topic “#Pursuit of beauty has no boundaries#,” got great attention, with 66.58m views and 56K discussions. Celebrity Chen Bolin, top fashion KOL Li Yilin, and gogoboi went to the “Devil City” in the desert, going far, challenging the limits, and led to high SK-II super topic forwarding rate and brand exposure.

WeChat strengthens daily communication between Chinese skincare brand and consumers

WeChat has a huge user base of 1.08 billion active users per month, and it tends to be more active in the information exchanged with consumers. As an important method of information publishing, WeChat public accounts reconstruct the relationship between enterprises and consumers.

Popular Wechat cosmetics KOLs case: A WeChat “celebrity” curating beauty-related content for her fans

Xiao manman xiao (小蛮蛮小) is one of the earliest bloggers to share their lifestyle and shopping products online in China. Through years of personal accounts operation, Xiao manman xiao has built a personal image, covering Xiaohongshu, Weibo, and WeChat platforms. On her public account, Xiao manman Xiao constantly shares her favorite and most useful products on her social media platforms, with detailed information and embedded purchase links. Thanks to her solid foundation in the beauty recommendation area and trustworthy image, her platform generates high sales conversion rates.

On Women’s Day, Xiao manman xiao held a sales campaign of Xiao manman xiao co-limited hair removal machine, which was welcomed by fans.

Promote your Skincare products in China with Weibo’s power

From 2018 to 2019, the number of Weibo users continues to grow. As of January 2019, Weibo monthly active users reached 320 million. For the younger generation of cosmetic consumers, Weibo has become one of the most important platforms for obtaining and exchanging beauty information.

Popular Weibo cosmetics KOLs case: A Korean cosmetics KOL influencing Chinese consumers

Coming from Korea, Pony started to write a beauty blog in 2008. Since then, she has been sharing the most trendy make-up skills, and fashionable makeup looks to the public. Her makeup techniques are famous for easy-to-apply, practical. By sharing online makeup tutorials and unique makeup techniques, she has become one of the most influencing cosmetics KOL in both Korea and China, In 2016, she opened an account on Weibo and attracted 2.5 million fans within just 8 months. In addition, she usually posts make-up tutorial video & lucky draw and product recommendation via video. Females born in the ’90s make up 90% of total followers.

Digital marketing in China for skincare products with the help of Xiaohongshu

Xiaohongshu, also is known as “Red,” is one of the largest and fastest growing social E-commerce apps in China.

So how Xiaohongshu leads to more brand discovery and impulse buying?

Customer randomly browses other users’ product reviews, then stumble across an interesting post or product, and lead to the product page, finally purchasing.

Popular RED cosmetics KOLs case: Celebrities sharing products as beauty bloggers is a new trend

Nana Ouyang is a Taiwanese cellist and actress born in 2000. She was born in a family of artists, learning cello since childhood, and is now a student at Berkeley’s music college, which helps her build a positive youth image. Best known for her TV and reality shows, she is ranked 100th on the list of the most commercially valuable celebrities of 2018. Thanks to her sweet appearance, lovely personality, and outstanding talent, she has now accumulated over 14 million Weibo fans and nearly 5 million fans on Xiaohongshu.

In her vlog, Nana Ouyang shares different aspects of her life, which is appealing to her fans. She also recommends her favorite products as an influential KOL on Weibo and Xiaohongsu. She has posted over 120 times on Xiaohongshu, forming an authoritative voice among her audience. The brands she recently recommended are Armani, Dyson, LA MER, CPB, TOM FORD.

Opportunities for international skincare brands in China

The skincare segment in China represents a particularly high share of the cosmetic market (50%). This well-established presence of Skincare products in China makes the market mature and the consumers savvy. China’s skincare market is going through a “premiumization” stage, in which local consumers are willing to pay a higher price for higher quality products.

Well-established foreign brands will benefit from this “premiumization” as the local consumers still consider them as trustworthy and reliable. International brands can, therefore, capitalize on its Western origins and expertise to establish their reputation and nurture consumer trust.

Also, the male beauty market is a promising niche. Chinese men have become quickly interested in skincare products. According to a recent study conducted by social media platform Weibo among its users, male consumers nearly double their spending on skincare every year, and the market segment grew by 18.5% in terms of sales volume between 2013 and 2017.

International brands need both to establish the brand in China in the right way so that it can communicate its positioning correctly, and to increase its brand exposure so that more consumers can discover the brand, understand it, and therefore purchase it.

Author: Zichun LI

Make the new economic China Paradigm positive leverage for your business

Do not hesitate to reach out our project managers at dx@daxue-consulting.com to get all answers to your questions

This article Business opportunities in the Chinese beauty market: Consumption upgrade of the Skincare market in China|Daxue Consulting is the first one to appear on Daxue Consulting - Market Research China.

Overview of China’s coffee market

The Coffee market in China has been steadily climbing for years. In 2019, the market scale of coffee in China reached US $10  billion, which only US $7 per person. Chinese coffee consumers are mostly in tier-1 and tier-2 cities, as lower tier-city consumers become familiar with coffee, the market has potential to explode.  If China’s per-capita coffee consumption matched that of Japan (at US $237 per person annually) China’s coffee market would reach $330 billion US, which is a lot of room to grow. Hence, the coffee market in China is promising to explore.

[Data Source: chyxx “The Market Scale of Coffee in China”]

Since 2006, Costa Coffee, the British coffee shop chain has entered the Chinese market and expanded dramatically. Based on the Starbucks model, with the implementation of Coffee shop just nearby Starbucks stores, its ambition is to make China become its ‘second home’, having one-third of the market share of coffee shop market. Costa Coffee has the particularity to have his own roastery with their proper blend in every store. The giant has since more than 3,800 stores globally.  

However, Costa only has 293 China stores as of mid-2020. The possible reason may be the aggressive competition among those famous chain coffee brands. Starbucks leads the coffee market in China.

See also our piece on the Coffee shop market in China

In 2017, Costa China’s parters of Southern China withdrew its shares. Thus, Costa China and Costa’s parent company were able to totally control China’s southern market, preparing for Costa’s expansion plan. However, in 2018, Costa was adopted by Coca Cola with 3.9 billion pounds (around 5.1US dollars). James Quincey, the CEO of Coca Cola, contended that the company desired to create a drink portfolio catering to customers. Costa can bring Coca Cola to explore the hot drink market and build a robust coffee sale platform, while Coca Cola can create more opportunities for Costa to develop new service. After Coca Cola acquired Costa, Costa started to make some innovations to improve its position in the coffee market in China.

Strategic Approach for Costa Coffee to Enter China’s Market

In order to differentiate Costa Coffee from its strong competitors such as Starbucks, Costa Coffee relies largely on local Chinese retailers. One of the recent moves included an agreement signed with the Beijing Hualian Group, a nationwide retailer. Costa Coffee also gives many authorities to its partners; as more it gives authorities, more the operations are efficient.

Costa Coffee conducts a strong analysis of the local market and is open to change its offer according to its region and the taste of the people in that region. This strategy leads many Chinese consumers to give feedback saying, even in Shanghai and Beijing, Costa coffee tastes slightly different. Ye Xiaobo, the store manager of Costa Coffee 1912, said: “Starbucks are more casual like the way Americans do while as for Costa Coffee, is more traditional, rigorous with more focus on the utensils”.

Costa Coffee also noticed that Chinese customers tend to be more comfortable sitting in a more private space while drinking coffee. Costa Coffee has been focusing on a smart way of arranging tables and chairs so that every customer will feel more at ease.

Like its competitors, Costa also embraced the localization strategy by adding iced green tea to stores in southern China and a hot beverage in northern China.

Overview of its Long-Term Business Plan in China

Compared to Starbucks’ 16-year-presence in China, Costa used only 8 years to reach 25% of the total market share. The only problem is that having too many partners to share its profits can be risky in the future. Thus, how to build an efficient platform where each party has a fixed say and how to create a system to prevent future conflicts remains to be considered.

Costa Coffee Club

Costa coffee in China is directly competing with the American coffee maker “Starbucks” who have seen a lot of success in China with a strong local strategy, with an emphasis on the consumer experience factor.  Such as his main competitor the British Coffee brand is proposing a loyalty card for app or android phones, the member can gain points every time-consuming at the shop in order to get free coffee or other goods.

How to launch a new product in China’s coffee market

In September 2019, Costa initially launched its portable instant coffee in the U.K, gaining 6 percent market share in a short time. Later, on March 25th, 2020, Costa’s instant coffee appeared in China’s coffee market, marking its formal layout in China’s instant coffee market and the beginning of its ‘omi-present’strategy, making products for the home in addition to coffee shops. This coffee is available in online platforms, supermarkets, and other distribution channels, mainly in tier 1 and 2 cities. Costa’s overseas market CEO said China was an essential market for Costa, and considering modern consumers’ fast pace of life, Costa targeted the instant coffee market to adapt to customers’ requirements and develop new growth points for Costa under the competitive coffee market in China.

Image source: sohu.com, Costa Coffee launches instant coffee in China

Cooperation with Onecup to kick-start China’s at-home coffee market

Recently, it is reported that Costa united Onecup to produce customized coffee capsules with Costa’s formulation. Meanwhile, similar coffee will also be accessible in Costa’s stores. Although Costa has many stores in China, it aims to make its products available everywhere. Particularly, NCA’s global data unveiled that the average person consumed 2.06 cups of coffee a day. That comprised 1.37 cups at home, 0.24 cups at workplaces, 0.25 cups at restaurants and cafes, and 0.2 cups at other sites. Most coffee around the world is consumed at home. Their cooperation can allow more people to enjoy Costa’s high-quality coffee, triggering more consumption of its coffee.

Daxue Consulting expertise

With many years of experience in the coffee shop industry, Daxue Consulting can help you enter the Chinese market and develop your brands to reach millions of consumers. From online surveys to mystery shopping, our consultants in China can give you a full tour of the Chinese market and determine what is the best strategy for your brand. To know more about the Chinese coffee market, do not hesitate to contact our dedicated project managers by email at dx@daxueconsulting.com.

Learn how to run a coffee shop in China

This article Costa Coffee in China: Becoming omni-present in China’s coffee market is the first one to appear on Daxue Consulting - Market Research China.

Full transcript below:

Hello everyone. This is China Paradigm, where we, Daxue Consulting interview season entrepreneurs in China.

Matthieu David: Hello everyone. I’m Matthieu David, the founder of Daxue Consulting and its podcast, China Paradigm. Today, I am with Guillaume Sergent. He is French. You are the founder of Ailion Golf. I was asking you how to pronounce it. It’s a very good name. I really like it because I think it gives both a sense of elegance and something like flying. I don’t know if it is the influence of French in this word. With power and also easy to translate in terms of pronunciation for Chinese and we are at China Paradigm, you are based in Shanghai and that’s why I am insisting on the Chinese perception. You started a business in 2015 first in France and then you developed in China and my sense is that it took off and you dedicated more time to your business when you arrived in China because at the time, you found suppliers, you found people to work with and today, you focus more about the brand that is focusing on golf apparel in China. So, it’s about golf apparel in China including jackets; maybe more and you are going to tell us if it’s more. Some numbers about China’s golf industry. You are selling in China and in France. I would say to France because I believe it is more on the website in France and more offline in China’s golf industry. So, the growth market in China; a few numbers and a few dates. In ’93 there were no golf courses in China. Not a single one. The country had opened to the world nine years before and still, there were no golf courses, no China’s golf industry. The first one opened in 1983. It’s said that we have about 1.2 million players in China. France would be 2% of the population, but for China, it’s still pretty niche. Golf is associated with success, to wealthy people and used only 1.4% of the worldwide golf in China compared to 45% in the US. So, if you compare the room for growth, it is huge. It may be a bit mistaken to compare it this way, but still, we are at a ratio which is ten times less. So, we can imagine that it is going to improve. It is a conception. You use golf to show off. You use golf to show you are successful, but yet it is not something that the government wants to show. So, officials are not allowed to join golf clubs (learn more about the golf ban in China). So, it’s sort of a paradox in China as always and golf is represented as one of these that we are presenting as a paradox. Thanks for being with us. It is a long intro because I’d like you to say a few words about China’s golf industry. So, what about Ailion? Can you tell us more about what you do and about the size of the company?

Guillaume Sergent: Yes, thank you so much. A great introduction. I really like first how you explained the business and the golf and the paradox of China’s golf industry. It is exactly like this here. So, about Ailion, I would like to come back to the name. As you guessed, Ailion in French it is a mix of two words. Eagle is that is called “aigle” in French and “lion” which is the lion. So, it’s two words that are combined and we try to make it easy for everyone around the world to pronounce the name of our French golf brand in China. So, that’s the name, and as you pronounce you can say, Ailion, “Ileon”. It depends on the nationality of the consumer. Then about our DNA, I would say we are a fashion lifestyle brand inspired by a golf-like style. The idea about our French golf brand in China at the beginning was, “I’m a golfer” and when I play golf in France, it’s in the middle of my normal day which is the morning I could go to the driving range and I could have a meeting. So, I don’t want to change my clothes and still look elegant and comfortable. So, it was really the beginning of the idea to create a brand, especially pants which are our aero products. Then about our size. We are still a start-up so, we are basically less than 5 people working and we have partnerships here in China and in France, we are just using consultancy. We have Sonny Anderson who is a former football player who played for Barcelona. In the past in France, we sponsor a lot of big events which are the oldest prom in France; 25 years existing with more than 400 players and also the biggest growth charity in France which has helped to increase our brand awareness. In China’s golf industry, we developed our partnership with golf clubs and as you said, we try to mix offline and online shops because as a new French golf brand in China, people need to touch and to see our real product.

Matthieu David: So, you gave a sense of the size of the team. Would you mind sharing the number of clients, number of SKUs, revenue; a bit of a sense of where you are in terms of development. Still recent captains, fifteen or let’s say sixteen. So, it is still as you say a start-up. If you can share any number that would help people listening to us to understand where you are in your development?

Guillaume Sergent: Yes, so at the beginning, we started just by one product because it was just a crazy idea to give to all golfers and also like normal guys like you, for example, to be able to wear pants that is elegant and you can play golf or even ride a bike without having to be wearing sportswear. So, we started just by one product and then, with the success of this product we decided to have more SKU’s and so now we are around 20 SKU’s, but we are not thinking about in terms of SKU’s because now, since a few months by chance, the retail mindset changed a lot and the fashion mindset changed a lot and this is something that we tried to improve which is sustainable predictions. Start producing tons of SKU’s which just makes no sense for everyone and not even for the customers, but even also, for the world. So, we have like reasonable SKU’s with products that you can wear like Diva Life and also then the outdoor activities.  In terms of revenue, we are around 10 000 revenue which is still like the beginning and we are still looking for the second investing time. So, during this special time because as you know, with the Covid-19 it is really special. We try to induce more change with this business model of making on order which we have started to think about before the crisis. So, we will see because, to be honest, this time we are facing a big change.

Matthieu David: Yeah, we are recording on the 18th or 19th of March, 2020. No, it is 20 March 2020 and the crisis seems to be averted in China, but still, it’s recovering. Retail is not I think entirely open, but it’s on the track of being 90% open and it’s in Europe and the west that difficulties are appearing (learn more about China’s Covid-19 recovery). I’d like to talk about the product. What is interesting in the start-up and especially when we are in China is how do you create your first product? I don’t think you have the background of the fashion industry, or as a designer or in finding a clothing manufacturer in China and I think that is a question people have. Where do you start? What do you start with? I listened to one video and you said you found a clothing manufacturer in China at the campus and you saw people shooting and you were asking these people what they were shooting and then they connected you to a producer, but more largely, how do you find a clothing manufacturer in China? How do you manage it and how many can you produce for a start because that’s also an issue you mentioned;  all the factories you have met initially were asking for a huge amount of production. So, if you could give a sense to the people who are listening to us on how you deal with low orders, finding factories you can trust; knowing that you can trust the and there is one more thing is that you are mentioning that you have an innovation with your croquet which can clean golf balls. That is also something that could be interesting. How do you establish innovation? Is it all by yourself? Is it with the factory? So, about the product generally speaking, how do you develop it and how do you produce?

Guillaume Sergent: Okay, so first I had the idea a really long time ago. It was funny; maybe more than 10 years. I even don’t think about launching a company or a product. Just, I realized when I was playing golf and you know when you are playing golf, the only moment you can catch and bring your ball and clean it is when you are on the green and as a golfer, I am really picky with my style and I don’t want to dirty my red pants and so it was really annoyed and in France, we don’t have caddies as they have in China. My type was really far away. It took me really long to think of how to clean my ball and finally, the gamers behind us wanted to play and my friend says, “Hey, we have to play now.” I missed my shot. I was really, really angry and I felt like, “Oh, why?” Why couldn’t we have accessories to help us focus on the stroke? So, I started to have a look on the internet and I just found really just weird things; accessories that you could put on your pocket, which was really not convenient. So, I started to think, “Okay, why we never wrote golf pants?” I mean a golf brand pants itself because it is super expensive, first and then you will not wear it a long time or for example, in the beginning, I was playing golf and I would say, “Oh, I want to buy one pant I will wear like what; 3 or 5 times a year.” So, I think about, “Okay, what about creating a product that you can wear like for your everyday life and also, which could be really easy and comfortable for golf” and then about the accessories about the pocket, we said, “Okay, golfers like to have excuses if they are badly made shorts. So, in the beginning, we thought about just a towel you can plug on all the pants, but most of the time people are not warming up and I was sure they will give the excuse about this accessory. So, we started to think about what about integrating this pocket on our own products. So, we did research. I just did it by myself. I’m just a fashion addict and I’m a golfer, so I just know what I don’t like and if when I swing, I feel discomfort, I say, “Okay no, I don’t pull the pocket on this way. I just use a zipper and not a button.” So, we just iterate a few bends. During this time, I was in Paris.

Matthieu David: So, the first prototype – we talked about a prototype earlier – so, you created it yourself, right?

Guillaume Sergent: Yes. I created it myself.

Matthieu David: So, when you had to find a clothing manufacturer in Chinayou would be able to already show a product?

Guillaume Sergent: Yes, definitely. Before that, of course, I designed it on paper, but then to make it, I hired some designers to just make it.

Matthieu David: How did you find a designer?

Guillaume Sergent: One of my best friends created a company; a professional company and they gave me the first advice of, “Okay, hire a designer.” So, then I just contacted a fashion school which is plenty of designers and they are all looking for experience. So, I met the woman and she did a good job. I gave it to her and we think of how to plug all the details; the feet of the pants. I gave it to her. They are not my favorite pants and said, “Okay, I want it like this fit and it has to be like this; the button” and all the details and so we built it together.

Matthieu David: I see. Which fashion school did you contact? I try to be as specific as possible.

Guillaume Sergent: It’s the classic one; ESMOD.

Matthieu David: ESMOD is in Paris and they have also a school in Beijing. I believe there is an investment from China? The founders are both in China.

Guillaume Sergent: So, I was able to draw, but I was not able to make it. By the way. I choose my own fabric that I really like and then, the same as I had the advice from my friend to hire the designer. I started looking for good fabric and so then I went to an exhibition in Paris to find the proper fabric which I had a really high expectation because during my marketing research I just showed really sporty pants or really fashionable pants. I want to give my customers something really in between, but if you are wearing golf apparel in China; the purpose was, “Okay, you need to be able to wear it with a jacket and with a tie.” It was really tough at the beginning to say, “Okay we need elastin, but not too much because if you put too much elastin you can guess, it is like really sports trousers. So, finally, I found in Switzerland has a very famous manufacturer which is Solo, which used to supply Nike and so on. So, it was pretty expensive, but it was real and it is still the best one. The first words from my customers when they try the pants are, “Oh my god. It is so comfortable. You didn’t lie.” I say, “I know.”

Matthieu David: We’re talking about the fabric? 

Guillaume Sergent: Yes, the fabric of the pants. So, then I did one prototype with the final fabric and to have the exact shape. Also, the number of meters and seeing like manufacturers. So basically, at the beginning as you said, I was in France and at this exhibition, I met some manufacturers, but they asked about ten thousand or like a thousand pieces. So, I was like, “No, I don’t want that. I want around a hundred pieces.” So then, by chance, I moved to China and I followed my wife. She was relocating here. So, I was thinking., “Okay let’s go and see China. It is really known about manufacturing and so I am sure we will find a manufacturer.”

Matthieu David: For the prototype; by the time you had a designer, the designer is doing drawings. I understand you found the fabric. I understand that you created your own prototype yourself, but if you want to go beyond the prototype and to have something comfortable which fits people you need to work with someone who knows how to produce those pants. Who did you work with to produce the prototype? Was it in a small shop? Was it with a small designer who was also able to produce a prototype? Was it yourself?

Guillaume Sergent: No, no, no it was the designer. Me, I provided the drawings and then we worked together about the fit, and then she stitched with the fabric I bought in Paris and we said, “Okay, here you have like too many fabrics. Here we need to add some blabla.” So, we did it like this. At the beginning towards like almost the final prototype which is not really final, but which fitted and then, which was the most important thing which is we did the final drawing on Lectla which is a software you could print the drawing and make the pants through the drawing and you just cut the fabric with the drawing.

Matthieu David: How do you spell Lectla?

Guillaume Sergent: L-E-C-T-L-A.

Matthieu David: Very interesting. So, you have this software that helps you to communicate with manufacturers and with people who produce easily with these standards.

Guillaume Sergent: I will add, ‘supposed’ to talk with the manufacturer. Why suppose? Because in Europe they are using this software and I came into China and so as you said, I found-

Matthieu David: So, we go back to China now?

Guillaume Sergent: Yeah, so those women who are just photo shooting for a fashion brand; they look like say westerners, but they are French. So, it was funny, easy and we started to talk and they gave their contacts to me about their manufacturers which were really small. So, able to make small quantities. So, I was super happy to find a clothing manufacturer in China. So, I met this woman who was managing the smaller manufacturer, and then that’s probably how it started. Why; because they didn’t have like traffic here in China. They are not using this software. So, it was like I had something, but we couldn’t print and we started because China is really strong to make garments. So, we talked together and they were doing fashion in small quantities and so they introduced to me their suppliers. So, when I met her, I came with my software drawing and I say, “Okay I have everything. So, let’s try to make some samples.” Unfortunately, I discovered in China electro was really not used. So, I did just by a copy at the beginning and what I did… 

Matthieu David: You gave the product to them?

Guillaume Sergent: Yeah just my size to be able to wear it, to see and to test them, but at least you really need to have all the software because the software gives you all the sizes. The idea of our product was to be like not tailor-made, but half tailor-made. So, we did the gradation which is like we are using American sizes for our golf apparel in China. So, from 30-40 with the lengths of the legs. So, we need to print these. It was quite tough and finally, by chance, I found the contact of Electra in Shanghai who printed for me the drawings of our golf apparel in China. So, then I could give my small manufacturers the drawings and they could cut my fabric and make the first batch. 

Matthieu David: So, at that time it was a prototype. How much money did it involve? Did you need to pay them for consulting for the time spent with you or what are we talking about? Is it something that they were willing to waste time on before you produce more?

Guillaume Sergent: You have to pay to put it up then they deduct the price when you get your order. The kind of money to make this kind of prototype; because you need to run around and buy fabric and also your time, but at least it is around 5 000 Euro, at least.

Matthieu David: 5 000 Euro for the prototype and the fabric and so on?

Guillaume Sergent: Yeah because you buy the fabric and you are buying small quantities and the small quantities mean it’s more expensive and then you hire the designer to have the drawings. Yeah so, maybe I add more than ten prototypes in my wardrobe that we are not using at all because at the beginning we had these that they made the prototype but on the wrong side of the fabric. Our fabric is waterproof and so on so, that was inside. 

Matthieu David: I see.

Guillaume Sergent: You can guess. You couldn’t have just 3 meters of the fabric. You need at least 10 meters of fabric.

Matthieu David: And then you produce about 100 units? Is that correct?

Guillaume Sergent: Exactly.

Matthieu David: So, we talked about the product. I understand now how you started and I understand the key differences and the unique proposition of the product. Let’s talk about marketing (learn how to achieve your marketing goals in China). You said that you do offline marketing in China’s golf industry and online marketing as far as I understand; online sales with France. Could you tell us more about how you connect clients with your French golf brand in China? In some interviews before you said it’s a lot of connections, it’s a lot of contacts; building clubs, golf clubs, going to shops as well to add your products. Would you mind elaborating more on that?

Guillaume Sergent: Yes, so first what is really interesting is to remember our agents. Four years ago, all of WeChat, Weibo, and KOL (learn more about KOL marketing in China) was not so strong in China. It was really the beginning and now, the game has changed completely. So, at that time you didn’t have so many and so many groups like this. I even don’t know if TikTok was still existing? So, you couldn’t have any chance to promote your product like this, which is the case now for two years, I would say. In France, we realized and when I started a project there, I met golfers and for me, it was the best way to help people to know the brand because we are not known at all and you have so many brands, so many competitors. Everyone is not just a golf brand, but just fashion brands. So, the big thing was, “Okay, how a French guy could sell a product without speaking Chinese in China’s golf industry.” So, I talked with friends who of course were playing golf a lot. I started to meet golf directors and so on and we decided to follow the same strategy as we did in France, which is sponsoring golf events in the golf courses to promote our golf apparels in China. We met our customers and we helped them to know the French golf brand in China and know me, even play with me golf and also, what I learned in China and all the advice I got from people like you who are living there for a while said, “Okay, you should promote yourself” and at the beginning, to be honest, it is a bit tough to promote yourself and sell yourself because you are not the brand and I am not famous. So, it was more about the product. So, that’s the strategy we tried to have; sponsor different golf tournaments and help people to know about our French golf brand in China, know about our value proposition and start this and also, what is fabulous with China is you talk (learn about the importance of networking in China) with people and if they like the product they say, “Okay let’s go.” We started it just like this throughout some shops and throughout some pants and said, “Okay, why not? We try it and that’s it.” It failed. It worked on others. So, it was quite like fun to see how these things go fast in China compared to France.  

Matthieu David: One thing I’d like to go back on is you talked about sponsorship. What kind of sponsorship are we talking about? Is it about moderating an event? Is it about giving some products for free? Is it paying for your logos to be somewhere? I believe that is maybe something you may spare for a later time because that may be costly, especially for golf because golf is where wealthy people go so it should be an expensive place to do advertising and to show your products. Would you mind sharing more about what a sponsor can be when you start your business in China’s golf industry?

Guillaume Sergent: True. So, as we did that at the beginning it was, we tried to pay and give money because people want money, but hopefully, we are a brand so in all golf competitions they are looking for gifts. So, in the beginning, we started like this; providing products like caps and for the winners some pants, some Polo shirts and so on. Then also, a chance at how to promote a brand was to organize by ourselves or with other companies and so as I developed a good network in the golf club, I started to meet some others in the industry of hospitality, fashion, retail, as F&B to say, “Okay, I am a French golf brand in China. We are organizing or we are trying to organize some competitions. So, what do you think about joining us?” You could meet like the final customers which are really tough in China to meet them and to meet us. So, also with the French government, we organize a big and huge competition at the Sushant Golf Course in France. So, the idea was the gathering of the French community, the French style on the competition and all the golfers of course really, really loved it. So, this is the first part of it and then of course as you mentioned, you need to give free gifts and free products to influencers and this is the part that is tough because you give some products to teachers, you give products to people who have good networks, but then you need to push a marketing plan to be involved and when you are starting a fashion business, marketing is really key. Of course, for us, it was our weakness because as you mentioned, my background is a bit funny. I did a business school and so I was really bad at marketing. So, I hired some consultants and we improved that, but then it was also after that, the next step to build brand awareness; a brand story because at the beginning it was a product story. So, that was really key and really expensive also and of course, we did mistakes. I guess this is a start-up life. 

Matthieu David: I see. It is interesting to look into sponsorship at this time because when you look at luxury brands, some took off with strong sponsorship and we are talking about one that is very famous, which is Louis Vuitton (learn more about Louis Vuitton in China). It took off in the US by sponsoring the American Cup and being very present at this competition. That made a difference and we know with horse riding which is sponsoring races; it is also actually a key component of luxury events or gatherings where you have sponsors and myself; my first company was a gift box company and I sponsored as well. There was a question: What is the return on the sponsor in China’s golf industry? It is not clear. WeChat now with the fact that people can write articles on you and sell it themselves after the product gets commissioned. I feel that it’s getting more and more trackable, which is I think the good news for the future.  How do you get an ambassador? You have an ambassador which is I think pretty famous.  I am not good at football (learn more about the football industry in China). I am not good at sports, but he seems quite famous. How do you get him to work with you? He is called Sonny Anderson, right?

Guillaume Sergent: Yes, exactly. It’s a funny story. Because of China, it is funny. So, as you know, we have a lot of WeChat groups here and a friend said, “Oh, my cousin is working in the sports industry and we want to know about the sports industry in China.” It was funny. It was three years ago and almost no one was there and I remember all the comments were, “Oh wow, why is your cousin now coming on this time that no one is there?” Instead, I say, “Me, I am interested and blabla.” So, I was available and I said, “Oh, I want to meet you.” We connected through WeChat. We got a drink and we talked about his business, my business and I said, “Okay” it was already like 6 to 8 months I was doing business in China’s golf industry and I was looking for more things in France and I know France is really important for them to have like luxury and so we started to talk and he was really involved in football which is really famous in France and I just asked, “Do you know any famous people playing golf?” He told me about, “Yeah I know Sonny Anderson.”  I was like, “Oh my god. Are you kidding me” and it was funny because he was one of my idols when he played in Europe and France? So, I was surprised and said, “Okay maybe I would like to meet him or to be in contact with him.” In fact, I learned by the past that he was the best friend of his daughter. He gave me the contact of the daughter and we started talking. It was really interesting and then we got phone calls and I have to say, he is really amazing. He’s really kind, really mindful and we made it through there in France and we started and he helped to develop a business in France, introduced me to some good relationships of him and we started like this, but he liked the product, again and he wanted to also involve himself in start-up’s and so that’s why I think he came into the project.

Matthieu David: Has he invested in the company? Has he done within the company or you… what do you give to him? Is it purely kindness or truly help?

Guillaume Sergent: No, of course. We ‘ve got a contract. He didn’t put money, but he is wearing and advertising us on his social network and we try to develop networks with people inside his network, but for now, he did not invest.

Matthieu David: You said in one article that you have a partnership with CTrip (learn about the possible secondary listing of the company in Hong Kong) and I interviewed another entrepreneur and she is in the travel business. So, it’s more understandable that she is partnering with CTrip and one of the questions we had is, how come CTrip which is a huge company is partnering with the small companies, start-ups who have just started? How do you enter it? How do you contact that? If I am correct. You said that you have some partnership and contact with CTrip, right?

Guillaume Sergent: So, it was funny. During trade golf once, I saw on the golf course, a CTrip event which was organized by the Citroen golf branch. So, I talked with a woman and I said, “Oh, I have French golf brand in China. I would like to sponsor one of your events. Could you introduce me to your boss?” She said yes. So, we had a couple of meetings with them and we sponsored one of the events in the Chi Chong golf course. It was purely random and it’s just because I was playing golf during an event and as I know, every time you organize a competition, you are looking for sponsors so it was a good opportunity and again, they liked the product. They liked the cap very much and it was like this.

Matthieu David: The learning I get from the talk today so far, is that it is important to be present at events, to connect, to be openminded and even to connect with online players like CTrip because actually, they go to the event, they connect as well and here you have your opportunities. Do you agree with that? Is it the way you see immerging your business to be active in the communities, to be present, and to engage with people?

Guillaume Sergent: Yeah, I completely agree. Even big companies need to have new projects, new products and they need to innovate. So, they don’t care if you are a start-up or not and even I think what is funny is just you have to pretend that you are bit bigger than who you are and what you have to be careful of is, don’t pretend you are bigger than who you are, but just be able to deliver good products or I don’t know; good things. Good training, good whatever and even big companies would be happy to have an innovation or to provide innovation to their customers. What they provided in this competition was a unique brand, a unique French golf brand in China and after that event, it was really funny because we started to see some Chinese golfers with my cap with my logo and it was fun because my friends sometimes send me pictures of those  Chinese guys wearing my caps and they were like, “Oh my gosh. They are starting to wear your brand.” So again, I think as you say, the most important is what is the risk to just try to talk to someone except a no? So, it’s really my mindset about that in China’s golf industry.

Matthieu David: What I feel and correct me if I am wrong, but the fact to be a foreigner in China actually is opening you up some doors. It is clearly closing some doors to some settle that you cannot join, but it’s also making you so different, so unique in an event that you can get access. You can get into contact with people and people will not dare not to answer. We are not there not to help you a little bit. So actually, opportunities happen as well by your own identity as a unique identity. Do you agree with my conclusion?

Guillaume Sergent: Yeah completely. I think they are curious and they want to know, they want to learn and again as you say, of course, we can’t access from a certain circle until you are speaking Chinese until you are speaking full about their habits and so on. So, for me, this is the best thing that I would like to bring back the day I come back to Europe is to be open-minded and full. Just listen to people and you don’t care about this Chinese, this American.

Matthieu David: And I feel it’s not happening necessarily in the rest of the world not necessarily in Europe. You are seen as an outsider.  You are seen as someone we don’t want in a lot of circles in Europe, but in China, when you are on this site, we are very different. We want to know why you are here, what do you do? You are a foreigner in a country where it is difficult to make business when you are a foreigner. You are on the golf course and you are a foreigner. What are you doing here? You are creating some curiosity. I’d like to talk about marketing which is more like offline marketing with people. I went to your website because I like technology and we do a lot of research with tech. I understand that you are using Shopify, you use Google Analytics and Facebook Pixel as well. So, you do a bit of online marketing to the west, I believe otherwise you wouldn’t use Facebook Pixel on Google Analytics. So, what do you to create traffic on the website? Do you do anything? I didn’t see anything for the newsletter I believe you have, but I didn’t see a Mail Chimp or anything. Could you tell us more about what kind of technology you use?

Guillaume Sergent: So, we’ve got two strategies. First, for China and another one for Europe because after a few months ere, we tried to use the same marketing and communications tools (learn more about what marketers in Europe can learn from China), but it didn’t work at all. So, for China, we are using Weibo and WeChat and articles not promoting at all almost our product.

Matthieu David: Sorry to interrupt, but do you sell on WeChat because you cannot sell on Weibo, but you can sell on WeChat. Are you selling on WeChat? You don’t sell on Tmall, Tao Bao, but you decided to sell on WeChat?

Guillaume Sergent: Yes, exactly. So, we are using this offline and for now, we are still thinking of how to provide a new program that would be different so we need to think of how and that is really important.

Matthieu David: Why would you need a new program, if I may ask? Is it to add a layer of engagement to other mini-programs?  

Guillaume Sergent: I think it could be more about if you are reading a new program it is more about the experience and how we can give something different because again, we sold a lot of mini-programs, but for me, they are just like embed something or just like embed and/or the classic process and you didn’t have any purpose on this so, again I don’t like to do something like everyone else does because you have to do it. Be different because if you are not different people will give up the mini-program and so on. So, it is more we attract people to be different and do like different content which is creative with China. For Europe, we used to have a light newsletter and we are using a lot of Instagram and Facebook and we are also using our KOL’s a lot because we have got also golf teachers now and they are promoting themselves and help us to promote the brand and also, of course, Sonny Anderson.

Matthieu David: How do you help them because helping; I believe there is something like a relationship with them?

Guillaume Sergent: Yes, we give them some products for free.

Matthieu David: Alright so it does not commission on what they help you to sell? It’s a few products for them for free and if you find out that they are very active, you would continue to sell them products.

Guillaume Sergent: Exactly it is more about steps and if they are able to introduce us to some business. We can talk about the next steps, but until they are, we are just like this, but to be honest, at the beginning we thought about this business model just engage teachers to sell our product, but it didn’t work because teachers are teachers. They are not sellers. So, it was interesting because at the beginning we really thought about this.

Matthieu David: I found out that we always think that people are rational economist people and if you tell them that they will get 30% commission on it, they would sell and they would think to sell, but actually they would do a better job if you actually get them involved in building the product, getting feedback, offering for free or thanking them on Facebook or Weibo or WeChat and soon; getting them involved, getting them visibility and also, thank them actually for most people who could help. That’s good enough and they are not looking for an additional business to make it as a business. That is maybe the mistake of business people or entrepreneurs who always think rationally about relationships. You said that you do Instagram and you are using also Shopify as a tool for your website. For people who don’t know about it, when you create a shop online in the west, you have a few choices with Shopify and it is certainly one that is growing faster. You could use Woo Commerce with Word Press, you could use PrestaShop which is very fresh and you can use Shopify which is Canadian and is doing like 40 billion, I think USD now. It’s is growing fast. 14 or 20 billion to open your own shop, not like Amazon where you would actually be on the marketplace competing directly with people. So, when you need to create a brand, Shopify is a very smart solution. Could you tell us more about your experience with Shopify?

Guillaume Sergent: So first, in the beginning, I started to use Word Press and Woo Commerce because it was just a landing page, but it was too basic and really not appropriate for e-commerce from my point of view. Then we switched from Shopify because PrestaShop is great, but at the beginning of a start-up I will never recommend it and all the consultants I met said, “Okay, you can have PrestaShop, but it’s like give it to you and you just get your license.” So, don’t go and don’t invest in something that you will not use as it has to be used. So first, I did like Shopify and you can make something really, really nice and really friendly. So, that’s why we pick Shopify.

Matthieu David: The comment you just said is also usually what people say about Magento which was built by E-bay which is a very heavy solution and people have the same comment as you said for PrestaShop. You need to start low key. You need to start with a few sales. You don’t want to build a gas factory when actually, you need a small shop to start. 

Guillaume Sergent: Exactly, so then also, I was really inspired by China for making Shopify wide because in China, you buy in maximum and all the solutions we got in Europe was really too slow, but I tried to find a way to make it really short because again, we didn’t realize how European and French people are not really internet friendly, especially when you are in the golf industry which is more on budget. We say 40 or a bit like 30 people, but most of them are between 45 – 65 years old. So, they are not really open-minded and even they are going more on the internet, they don’t know how to buy it. So, we think about that and we try to make something really smooth and simple, actually. In three clicks you can buy it. For me, it was really the most important thing with Shopify and again, we just have really good feedback about our website.  I guess we did it well.

Matthieu David: saw by looking at your website and inspected your website in code, you are using Facebook Pixel. What do you do with Facebook Pixel? Are you retargeting people going to your website through Facebook and Instagram? Are you doing a custom audience? Are you doing look-alike? What do you do with Facebook and does it work?

Guillaume Sergent: Customer audience. It works. We have more and more traffic and we have more and more sales. So, Facebook is not really a complicated tool. It is really useful. I am not managing this on my own. I have a consultant doing it for me. Again, what I learn and what we learn is it takes time. So, you have to be patient to build and to know more your target and to learn your audience because you make tests actually with Facebook and they change a lot or really frequently the tool and you have to try to say, “Okay I pick up someone who is following this kind of brand from this part of the world; Europe, France” and then sometimes you don’t know why your agents are increasing or sometimes it didn’t work. So, we did some tests and sometimes the tests were really good and some were really bad for two reasons from my point of view is just again, in Europe they have more and more advertising, more and more processes so with the new LGBD policy in France it was a bit complicated at that time to target it and to know and people don’t want to get bored about advertising and also because you are a new brand, you need to investigate some ways. So, until that, it was really up and down and now starting to be more stable.

Matthieu David: So, first of all, you need to test on Facebook, but I understand as well that Facebook is a bit working like the brain itself. The more data it has, the more it would be able to target actually your custom audience with the Facebook Pixel helping. So, that takes time because it needs to learn who likes your post? Who is spending time on your post? Who is going on your website from Facebook and so on? So indeed, that’s not like Google where you pay and you get immediate traffic. That is something that takes time. It is so true. It takes time. About funding; you talked about funding in some articles and interviews in the press. Have you gotten any funding and what is your view on getting funding in the fashion industry? I am especially asking that about the fashion industry because fashion seems like something that people want to start because they like it themselves and not necessarily because there is a business behind it, not necessarily because there is a rationale behind it. So, I think the investment industry is less mature in this segment because a lot about the likes and the fun to start a fashion brand. Could you share a bit of your view on that?

Guillaume Sergent: Yeah, it’s even if I can say, irrational because as you say, fashion is kind of a dream. It is like for me to have a sports club and you see all these billionaires are buying football clubs and it’s funny how it’s the same comparison. People want to have their own brand to sell, “It is my brand.” So first is we go to smaller investing as I say, family and friend investors and then we got another investor from the fashion industry and so that’s the product and that’s how we started.

Matthieu David: In France, right?

Guillaume Sergent: No, no in China.

Matthieu David: At the time you were in France?

Guillaume Sergent: No, no at the time we were in China, but it was a French investor.

Matthieu David: Okay.

Guillaume Sergent: So, then I think again about funding that was a key point at the beginning. Involve people who are concerned about you or the industry and not just about money because at the beginning if you are involving people who are not committed to the industry, they will put too much pressure on your business and on you and you don’t need pressure. You already have so much pressure as an entrepreneur. So, that’s the thing and then also, the business model is crazy. We are talking now about the crisis and everything, but if I can, I just have feedback and a reminder that since 6 months, now people are more aware of how to change the fashion business, but before that, when you talked about a new model or producing by orders and everything; people were laughing at you. So even investors, when you present this kind of model, were really skeptical about that. So, it was and it is about finding how you will make your plan first, and then you have to adapt your speech regarding the steps you are funding. So, at the beginning like family and friends, it is easy then. You need to have a plan about how you will settle the brand and so on and then the other steps for a bigger investment are more of what is your new value proposition about fashion because I will not say it is easy to make T-shirts, but almost, you know? If you have a bit of money tomorrow, you can start. I am sure you will have followers and people, but how you can be sustainable and why people will buy our T-shirts more than mine or more than picking other kinds of shirts? It’s more about that. It is a complete process about how to promote your projects and find a good investor for good funding. So, that’s a bit crazy and be aware of me, if I can say that advice; like how you choose the funds and it is really important when you have funders to make some setup’s really clear meeting about who you are, what you want to do, what is the target because fashion is crazy and it can change in one click. So, just be aware of that.

Matthieu David: Thanks for your time. It is one hour already. It goes fast, as you can see. I hope everyone is doing fine, who is listening to us. Stay safe everyone. We are still in the middle of a crisis in the world and thanks for listening to everyone. Thanks for joining us.

Guillaume Sergent: Thank you, Matthieu.

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This article China Paradigm transcript #96: The reality of brand building in China’s golf industry is the first one to appear on Daxue Consulting - Market Research China.