Welcome to the fourth edition of the Retex China monthly newsletter, bringing you the latest updates on China directly from our Shanghai team.
This month, we will explore the recovery of retail sales of consumer goods, analyze the boom in domestic tourism, and then observe the latest developments in the fields of robotics and electric vehicles. We’ll also take a look at the new openings of international Fashion & Luxury brands in China, not forgetting about local brands making their mark overseas. Finally, we will delve into the emerging trends: Scandinavian fashion brands and the world of fragrances.
Keep reading to uncover the latest economic and cultural trends from China!
Macro Economy News
Total retail sales of consumer goods rose in November
The National Bureau of Statistics (NBS) released its latest statistics on consumer goods in November 2023, which showed that total retail sales of consumer goods increased by 10.1% year-on-year to RMB4,250.5 billion.
Analysed by category, retail sales of clothing, footwear, hats, and textiles increased by 22% year-on-year to RMB153.0 billion; retail sales of gold, silver and jewellery increased by 10.7% year-on-year to RMB27.8 billion; and retail sales of cosmetics decreased by 3.5% year-on-year to RMB54.8 billion.
China’s domestic tourism revenue up 114% year-on-year in first three quarters
China’s tourism market experienced a remarkable surge during the first three quarters of this year, a senior cultural and tourism official said at the beginning of the month. Domestic tourism recorded 3.67 billion visits and a staggering revenue of 3.7 trillion yuan ($520.47 billion) during the period, representing year-on-year increases of 75 percent and 114 percent respectively, figures from the Ministry of Culture and Tourism showed.
The heightened desire for travel among residents this year had significantly propelled domestic tourism. “This surge not only stimulated increased consumer spending in the sector but also played a role in driving economic recovery.
The ministry is formulating a three-year plan to boost inbound travel, aiming to provide tourists visiting China with tourism products of higher quality and more convenient services. Chinese travel agencies and online travel companies have been allowed to resume outbound group tourism services to 138 countries, which will facilitate the recovery of outbound tourism.
Hong Kong Tourism Luxury Retail Sales Decline
According to Reuters, affluent Chinese consumers are now buying fewer luxury goods in Hong Kong, a change that is reshaping the city’s visitor economy, with the rise of shopping malls such as Hainan’s duty-free off-island shopping, change of consumer shopping preferences, and a boom in online shopping behaviors. The focus of Hong Kong travelers has shifted from shopping to experiencing local culture.
Science & Technology
China’s robotics sector offers new prospects for humanity
The robotics industry has seen robust growth this year. Beyond humanoid machines, the field encompasses a range of applications, from robotic arms on assembly lines to robots assisting in surgeries, rescue operations and rehabilitation.
Leveraging cutting-edge technologies, the latest GR-1 humanoid robot, developed by a Shanghai laboratory, boasts 54 joints that enable it to mimic human movement through a mobile phone.
Robots also play a role in rehabilitation, providing precision in given procedures and engaging games that entertain patients space station.
Demand for EVs triggers rush for talent in China
As the world races to decarbonize its economies and transition to sustainable energy sources, the electric vehicle (EV) industry has emerged as a key player in this field. This trend has triggered a rush for talent, as can be seen in Changchun, a Chinese city in Jilin Province, renowned for its automotive industry.
Students from Jilin University are unlocking their potential in engineering and design of EVs — they spend more time in the garage than in the classroom.For years, the team has independently developed a number of energy-conservation vehicles and won numerous trophies both at home and abroad. The latest one this year has made them the national champion of Shell Eco-marathon China.
The Shell Eco-marathon regional mileage competitions are designed for experienced teams to push new boundaries, encouraging innovation and new approaches to achieving energy efficiency.
Fashion & Luxury News
LOUIS VUITTON. Louis Vuitton placed giant LV Speedy bag art installations at the Huangpu River and Zhang Yuan in Shanghai, and at the Louis Vuitton House in Taikoo Li, Chengdu.
AMI PARIS. On November 10th, Ami Paris launched a pop-up store and café in Beijing’s Sanlitun Taikoo Li, while it also landed in two other Chinese cities through collaborations with coffee shops: SUNSET +a:b in Shanghai and Invisi in Chengdu. Inspired by the traditional Parisian café, the pop-up café in Beijing reproduced a miniature Haussmann-style building, transporting visitors to the streets of Paris with French elements like cobblestones and bistro chairs. The limited spots for experiencing the pop-up stores can be reserved through the official Ami Mini-P. To celebrate the grand opening, Ami Paris hosted a party at Hanlin Academy, where celebrities like actress Yeung Chin-wah, actor Xu Guanghan, and singer Yu Jingtian attended. Adorned with French elements, the party also incorporated Chinese elements such as sugar-coated hawthorn art experiences and pipa performances. Ami Paris also launched exclusive WeChat emojis called “AMI PARIS Meets Beijing”, blending the cultural essence of Paris and Beijing. “High-fashion cafés” have popped up across China in recent years, utilizing the concept of “brand lifestyle” to connect with consumers, share brand stories and promote brand culture. In 2023 alone, renowned luxury brands such as Maison Margiela, Louis Vuitton, and Burberry have opened pop-up cafés in major cities like Beijing, Chengdu, Shanghai, and Shenzhen.
CANALI. Canali opened the world’s first Caffè CANALI in Beijing Financial Street Mall.
PRADA. Prada presented ‘Pradasphere II‘ at the Shanghai Star Gallery of Art, open to the public until January 21st, 2024, free of charge. Curated by Miuccia Prada and Co-Creative Director Raf Simons, the exhibition featured a selection of nearly 200 fashion looks, some of which are being made public for the first time in 30 years; and over 400 exhibits covering Prada’s collaborations in art, architecture, culture, sports and more, presenting a rich cross-section of the brand’s 110-year history to Chinese audiences. Almost all the core figures of the Prada Group came to Shanghai for the opening of the exhibition, such as Miuccia Prada, the third generation of the Prada family, Patrizio Bertelli, Miuccia Prada’s husband, Lorenzo Bertelli, their oldest son and prospective heir to the Prada Group, Raf Simons, co-creative director of the brand, and Raf Simons, co-creative director of the Prada Group. co-creative director Raf Simons, Prada CEO Gianfranco D’Attis, and many others.
JAEGER-LECOULTRE. Jaeger-LeCoultre presented a festive art installation at Plaza 66 in Shanghai. Designed by digital floral sculptor Brendi Wedinger, the installation is inspired by the variety of natural flowers found in the Vallée de Joux, combining hard metal with flexible natural forms to create a scene of a tree in bloom.
TOD’S. Tod’s opened limited-time artisan workshops in Beijing SKP store, Shanghai Grand Gateway 66 Plaza store, Hangzhou Mansion store, and Shenyang Wanxiang City store respectively, where TOD’S Italian artisans came to the stores to provide on-site stamping customization services.
ESTÉE LAUDER. Estée Lauder announced a strategic investment in Chinese fragrance brand melt season. This is Estée Lauder’s first investment in a fragrance brand in China and the second Chinese beauty brand to be invested in by Estée Lauder after CODEMINT.
UMA WANG. Uma Wang opened first overseas store at Via Palermo in Milan.
CRISTOPHER RAXXY. Christopher Raxxy (William Shen), a down-focused apparel brand, has partnered with Milan-based brand management company N1 Srl, which is helping to distribute and market the brand in Europe, including the US and Russia. Christopher Raxxy is now part of the multi-channel retailer Modes, which has a number of stores across Europe.
PORSCHE. Porsche (Porsche) has opened its first platinum showroom in Xi’an, the Porsche Center Xi’an Chanba, in the northwest of the country. This is the first Porsche Centre in China to incorporate local aesthetics and highlight the individual design of a one-city, one-store facility, with traditional Xi’an architectural and cultural elements visible everywhere. The Porsche Centre has been awarded the Platinum level of the WELL Building Standard™ (WELL), the highest level of accreditation honor in the international healthy building assessment system.
MINI. Simultaneously with the Guangzhou Auto Show, MINI held the “Dongshankou Pop Up Street Activity” on Miaoqianxi Street in Guangzhou, where MINI dressed up the entire street and prepared surprise gifts or consumption discounts in conjunction with a number of local stores, creating a distinctive MINI cultural and artistic neighborhood while respecting the local cultural characteristics.
MERCEDES-BENZ. Mercedes-Benz invited cross-media visual art duo WAV (artists Cao Yuxi and Liu Xiaojiang), architect Zhang Shuojiong and French artist Laurent Perbos to collaborate on the design of “Flux in Speed“, an art exhibition inspired by the new Mercedes-AMG SL 63 4MATIC+, which will be held in Shanghai’s Taikoo Li on the Bund.
BYD. BYD has opened its flagship showroom at Dubai Festival City Mall, covering an area of approximately 800 square meters and designed by Germany-based studio KKD (Kurz Kurz Design). BYD announced its partnership with Al-Futtaim, the UAE’s leading car dealer, in March this year and officially launched the Yuan Plus for the local market in June.
ZEEKR. Geely’s electric vehicle brand ZEEKR has opened its first ZEEKR Center Store in Europe, located in Sweden’s capital city of Stockholm. The center store occupies two floors, including a luxury showroom and lounge, and is the first to showcase the ZEEKR 001 and ZEEKR X. The center store will open in December in Amsterdam, the Netherlands. In December, the Krypton Center store in Amsterdam, the Netherlands, will also open, and in 2024, more Krypton stores will be opened in other European countries.
The growing allure of Scandinavian niche fashion brands in China
In recent years, international fast fashion giants have encountered substantial challenges in remaining competitive in China’s dynamic fashion industry. These challenges stem from various factors, including the growing emphasis on sustainability and mounting competition from both domestic and international brands. In juxtaposition to the obstacles international fast fashion brands face in China, there has been a surge in the appeal of Scandinavian niche brands among Chinese consumers. For example, Swedish fashion brand Acne Studios has established a notable presence in the Chinese market since the opening of its first flagship store in 2018 in Beijing Taikoo Li Sanlitun (三里屯太古里). As of December 2023, Acne Studios has opened 17 stores in the Greater China area in 9 different cities.
With their minimalist design aesthetics, commitment to quality and sustainability, and a unique cultural heritage, Scandinavian niche brands present a unique allure that sets them apart from mainstream fast fashion brands. Their brand value and positioning align well with the evolving tastes of Chinese consumers, particularly the expanding base of eco-conscious and discerning shoppers. Therefore, for brands and marketers targeting the fashion industry in China, it is important to understand the increasing appeal of Scandinavian niche brands to tailor products and brand messaging in the way that resonates with the evolving preferences of Chinese consumers to better navigate the market.
Originating from Nordic countries like Denmark, Sweden, Norway, Finland, and Iceland, Scandinavian fashion style is defined by its modern, minimalist, and practical design approach. With concepts like minimalism and gender neutrality on the rise in China, consumers are increasingly favoring brands that embody these values, a trend accelerated by the COVID-19 pandemic as people spend more time indoors, focusing on functionality and natural materials.
Some of these brands have already established presence on Xiaohongshu (小红书) as well as other Chinese social media such as Weibo and Douyin. For instance, on Xiaohongshu, fashionistas can easily find a variety of posts related to Scandinavian niche fashion brands, ranging from try-on hauls to streetwear to collections of brand recommendations. Such posts can be brand collaborative or non-collaborative made by celebrities, influencers, as well as everyday users.Keywords commonly associated with this theme include minimalism, gender neutrality, simplicity, and utilitarianism, among others. Some representative brands include the Swedish fashion brand Toteme, and Denmark fashion brand GANNI, so on.
The fragrance market in China has experienced significant growth in recent years
The fragrance market in China has experienced significant growth in recent years. In 2022, it reached RMB 16.9 billion, and forecasts suggest it will surge to RMB 38.7 billion by 2026. In 2021, the fragrance penetration rate in China stood at a mere 5%, a marked contrast to the United States (50%) and Europe (42%). This significant difference underscores the considerable growth opportunities within China’s fragrance market, positioning it as a key player in the future expansion of the global perfume market.
In 2022, the primary purchasers of perfumes in China were young consumers, particularly those between the ages of 22 and 40. While women still account for 77.4% of perfume sales, more and more Chinese men are embracing the use of perfumes. Fragrance consumers primarily consist of white-collar workers living in first, new-first, and second-tier cities, with a monthly income ranging from RMB 5,000 to 15,000.
In recent years, fragrance usage has shifted significantly from formal occasions to everyday contexts, seamlessly integrating into various aspects of life. A survey conducted in May 2023 among 972 consumers revealed that 75.3% of consumers use perfume during casual gatherings or leisure activities with friends, while 51.4% and 45.3% respectively use perfume in formal occasions such as school, work or job interviews. Furthermore, about 20% of consumers reported wearing perfume while exercising, with about 10% indicating that they use it across various situations without differentiation.
In the Chinese fragrance market, fragrances fall into three primary categories: mainstream, niche, and boutique fragrances. Each of these categories provides a unique scent experience, catering to various consumer preferences. Boutique fragrances, often referred to as “沙龙香” (literally salon fragrances) are perceived as more exclusive and sophisticated than mainstream perfumes, and they tend to have a higher price. In 2020, 4 out of the top 10 brands on Tmall with the highest year-on-year sales growth rate were boutique fragrance brands. This success is attributed to the demand from China’s Generation Z, a population of 250 million, who value uniqueness and personalized experiences, which boutique fragrances provide.
At present, foreign brands predominantly dominate the high-end perfume segment. In 2020, Chanel ranked first by market share on Tmall, accounting for 11.3% of sales, followed by Dior (8.6%), Jo Malone (4.4%), and Yves Saint Laurent (4.2%). Only one local brand, Boitown (冰希黎) managed to secure a place in the top 10 Tmall perfume sales, which accounting for 2.8% of the sales.
Beyond wearable perfumes, fragrances have found their place in various other application scenarios, including home fragrances, car fragrances, commercial fragrances, and personal care or home cleaning fragrances. Notably, the home fragrance and personal care fragrance markets have a significant reach, while the car fragrance market stands out for its rapid growth.