WHAT THE RISE OF THE CHINESE DIGITAL …WHAT THE RISE OF THE CHINESE DIGITAL ECONOMY MEANS FOR AUSTRALIA 16 th of AUGUST 2018 DAVE RUMSEY CEO, ASAP+ INSPIRING YOUR CHINESE AUDIENCEIn

WHAT THE RISE OF THE CHINESE DIGITAL ECONOMY MEANS FOR AUSTRALIA16th of AUGUST 2018

DAVE RUMSEYCEO, ASAP+

INSPIRINGYOURCHINESE AUDIENCE

In the 1980’s a limited number of western brands made their way to China – it was very restricted with designated SOE stores only but evolved over the decade with JV’s and as further restrictions were lifted foreign brands began to operate and so the influx of foreign brands started.

In the 1990’s it was about following the crowd, the concept of individual consumers had emerged and citizens started to have more money but weren’t savvy in their purchasing

After 2000, Chinese consumers matured as the huge influx of foreign goods was in full swing. China had not been impacted by the Asia financial crisis and retail sales were growing. The behavior towards wanting the latest and greatest started, “they were what they bought”

The Chinese economy has continued to grow at double digit rates and although this has slowed in the last few years, middle class consumers are still optimistic that living standards will improve and their earnings will continue to increase. The Chinese consumer has become more sophisticated and the market has become saturated with both international and local brands. It is a highly competitive consumer market place, but Australian brands still have some advantages.

POWER INDEX OF BRANDS IN CHINA

115

115101 104 101

100 99

89

100 10096

9999

100 101

2010 2011 2012 2013 2014 2015 2016

Chinese brands

multinational brands

Source: brandZ / kantar millward brown

3828

2739

2014

1370

828

463

103

4000

3000

2000

1000

500

100

2010 2012 2014 20162011 2013 2015 2017

CHINA ONLINE B2C MARKET(BILLIONS RMB)

224

Source: Mckinsey meet the Chinese consumer

ATTITUDE TOWARDSTRENDS

I attach more importance to personal feelings and

style and would not follow trends blindly 56%

ATTITUDE TOWARDSSPENDING

The grading of products and services I use now is higher than before, even

though this means greater spending

60%

ATTITUDE TOWARDSBRANDS

Using products of well-known brands can lift my

self-image52%

ATTITUDE TOWARDS IMPORTED PRODUCTS

40%It is not important whether the product is

imported or not, the most important thing is whether it meets my demands

CITY TIER

GENDER

56%44%

13%23%17%19%

28%

TIER 1

TIER 2

TIER 3

TIER 4

RURAL

14%

HOUSEHOLD MONTHLY INCOME

23%

23%

26%

28%

<3,499

3,500-5,499

5,500-9,499

>9,500

AGE

14% 23%

30% 19%

13-17 18-24

25-34 35-44 45+

INTERNET INTENSITYAvg. Hours spend weekly

24% 37% 39%<14 14-21 >21

A GROWING MIDDLE CLASS Source: iConsumer China

1987 2013772 MILLION

INTERNET USERS

70%In 2025

Of Chinese will live in cities with more than 1 million people

221Number of cities with more than 1 million people

By 2030 China will add

400Million people to

cities

SPEED OF URBANIZATION BY 2030

More than the US population

CHINA DISPOSABLE INCOME PER CAPITA

Source: national bureau of statistics of china

36396

33616

31195

2884426955

24564

21809

1910917174

15780

40000

35000

30000

25000

20000

15000

2008 2010 2012 2014 2016 2018

40% 100RMB in cashOf Chinese regularly carry less than

MOBILE PAYMENTS

CASH

CREDIT CARDS

MOBILE PAYMENT DURING TRAVELS [% BY PREFFERED PAYMENT METHOD]

62%

11%3%

57%

25%33%

56% 57%

32%

11%4%

TAXI HOTELS TOURISTATTRACTION

GAS STATION

45%

While still being rolled out and more of a novelty in the Australia market, Chinese have completely adopted digital payments as a natural part of their lives.

Source: IPSOS, 2017 Mobile Payment Usage In China Report

Adults in China will spend2 HOURS, 39 MINUTESa day on mobile devicesin 2018,

11.1%+ over last year

ONLINE SHOPPING CONSUMPTION BY DEVICE (%)

2013 2014 2015 2016 2017

88 8 8 8

36 33 34 30 28

53

71

81 84

5760 57

59 57

55

77

70 67

SMART TV

TABLET PC

LAPTOP

DESKTOP

MOBILE PHONE

Source: What’s Next for China’s Connected Consumers – A Roadmap for Driving Digital Demand,

Live streaming with KOL shopping and making your own instant purchase

It’s important to understand the depth of the Chinese digital ecosystem

SOCIAL CHANGES CONTINUE TO SHAPE CHINESE CONSUMER

BEHAVIOR

THE RISE OF THE MALE WALLET

Men who are increasing placing importance on their fashion and

looks

Buying products that reflect their values

About every aspect of their lives from

personal fitness to imported goods

They don’t mind seeing advertising and have a

higher level of trust in digital

A$195,979 IN PRODUCTS IN JUST THREE MINUTES

Chemist warehouse was the first merchant on Tmall global to reach

A$1.96 MILLION IN SALES IN ONLY 46 MINUTES,

Chinese consumer use words related to

“HEALTHY” 1.6X more frequency when describing Australian products than other countries products

Chinese consumers use words related to

“NATURAL” 2.5X more frequently when describing Australian products than other countries products

A$138 MILLIONin sales on TMALL

40 PER CENT OF ANNUAL SALES

$700 MILLION are derived from China.

SOURCE: BAIN & COMPANY SURVEY OF 2000 CHINESE CONSUMERS

In 2017, there were approximately 232,000 CHINESE CITIZENS studying in the higher education institutions in

Australia.

$28B in education exports in 2017and will be over $30B this year

FY10 11 12 13 14 15 16 17

30

25

20

15

10

5

SOURCE:ABS

AUSTRALIAN EDUCATION EXPORTS

In 2017, 1.3 million CHINESE CITIZENS travelled to Australia for leisure and business trips.

$10.4B in overnight spend in 2017and will be worth over $13B by 2020.

FY13 14 15 16 17

10

8

6

4

2

SOURCE: Tourism Australia

CHINESE TOURIST SPEND IN AUSTRALIA

SIMPLE WAYS TO REMOVE THE FRICTION ACROSS THEIR JOURNEY TO YOUR BRAND

ACCEPT CHINESE PAYMENTS When Chinese travelers come and they are here in Australia. Encouraging the student + business visa carriers to spend by offering the payment methods they are familiar with.

BE ON THEIR PLATFORMS Ensure that you have a presence on key Chinese eCommerce and Social platforms and your content is in their language

TALK TO THEM Think about responding to comments in Chinese about your brand and products by creating a relationship with them.

GO BEYOND THE BASIC CHANNELS

LOOK ACROSS THE eCOMMERCE SPECTRUM

MAKING CHANGES AT CHINA SPEED

Establishing a presence on the main social channels is not

enough

Online malls like Taobao, Tmall and

JD.com and others like NetEase Kaola, Redbook and Jumei along with vertical specialists like beibei.com for a more

targeted promotions

The Chinese consumer changes at record speed so Fail fast is something that any brand should not be afraid to do – if one strategy or platform isn’t working

then change focus

UNDERSTANDING THE WORLD OF THE CHINESE

CONSUMER As the world around the Chinese middle-

class consumer changes fast Understanding how they react to those changes is pivotal and what influences

their decisions

THE RISE OF THE CHINESE DIGITAL ECONOMY PRESENTS AN AMAZING OPPORTUNITY FOR AUSTRALIAN BUSINESS

THANK YOU!

Follow me on twitter @daverumsey

© 2018 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential.

ADOBE SYMPOSIUM John Mackenney – Principal Digital Strategist Adobe | The China Digital Landscape

© 2018 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential. 2


China is already a global leader in e-commerce and digital payments, and is home to one-third of the world’s unicorns

3


China’s is one of the leading global investors in digital technologies

4


3 factors driving potential….

5


Factor 1 - The big and young Chinese market is enabling rapid commercialization of digital business models

6


Factor 2 - Well-capitalized BAT players are building a rich digital ecosystem that is now growing beyond them

7


The BAT companies are developing a multifaceted, multi-industry digital ecosystem

8


China’s digital ecosystem is growing beyond the big three

9


Factor 3: The government gave digital players space to experiment before enacting official regulation, and is now becoming an active supporter

10


In Summary

11

The future looks promising…..

Documents

WHAT THE RISE OF THE CHINESE DIGITAL …WHAT THE RISE OF THE CHINESE DIGITAL ECONOMY MEANS FOR AUSTRALIA 16 th of AUGUST 2018 DAVE RUMSEY CEO, ASAP+ INSPIRING YOUR CHINESE AUDIENCEIn