The report, jointly released by the China Economic Monitoring & Analysis Centre (CEMAC) of the National Bureau of Statistics and The Nielsen Company, is the result of a survey of 3,500 shoppers across the country.

Overall, consumer confidence increased one point to 109 after five quarters of continuous increase in China.

In the rural area, the index is 117, up six points from the last survey, which is attributed to the central and local governments’ stimulation policies and an increase in income levels for farmers and migrant workers.

On the other hand, consumer confidence fell in urban areas. The index for tier one cities dropped five points to 101, and seven points to 98 for tier two cities. For tier three and four cities, the index was 100 and 104 respectively.

“After several consecutive quarters of increasing consumer confidence in China, it was inevitable that we would eventually see a pullback like the one we see this quarter with consumers in China’s upper city tiers. Confidence cannot increase indefinitely. There is a limit,” said Mitch Barns, Greater China president for Nielsen.

Increasing consumer prices and stock market volatility are believed to be two of the reasons for the drop in confidence in tier one and two cities.

Broken down by income, the confidence index rose with two and three points among low and mid income groups respectively, but dropped by seven points among consumers in a higher income bracket.

The report also finds that Chinese consumers are most concerned about their income, followed by health and education for their children. Other key concerns include rising food prices, healthcare, job security, parents and career development.

Source: http://en.campaignchina.com/Article/228745,chinese-consumer-confidence-drops-in-cities-rises-in-rural-areas.aspxhttp://en.campaignchina.com/Article/228745,chinese-consumer-confidence-drops-in-cities-rises-in-rural-areas.aspx

This article includes the following topics and has a regional focus on China, South Korea, Japan and partly India:

1. Demographics on social media use in Asia (China, South Korea, Japan, India)
2. Developing a social media strategy that pays into SEO and includes PR activities
3. Explanation of social media channels

1. Demographics on social media use in Asia (China, South Korea, Japan, India)

The following graphs and tables show information about the use and penetration of social media in China, Japan, South Korea and India.

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Channel usage per country:

Every market is different:

Still, different markets show different user behavior. A reason for this could be the maturity and the development of a country in general. In the following table the item “research / find products to buy” gives an indication: The more developed the country the higher this shopping and comparison related behavior is listed. That’s no proof of course, but an indicator.

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2. Developing a social media strategy that pays into SEO and includes PR activities

You need to have a strategy to fully leverage the potential of social media for SEO. All activities should be coordinated by one person/department. It’s possible that different departments participate in the social media execution, e.g. PR, sales, customer support, but one coordinator needs to remain the helm.

Steps of a social media strategy:

1. Understand your target group. Listen and learn and collect consumer insights. Find out where your target group likes to stay online.
2. Your target group consists of different kind of online contributors. Define the right channel for the respective user group.
3. Execute the channels.
4. Make sure that channel manager communicate with each other to leverage content and create links
5. Track, collect more consumer insights, learn more and use this information to refine your approach.

3. Explanation of social media channels

SEO/search engine results:
All content created in the channels will finally be picked up by search engines and add to your visibility especially for brand and product related keywords. It’s important that good and high-quality content is available in the search engine result pages to create upmost influence. If you do a search for your product or brand you will notice that search engine results are consumer dictated.

Just test yourself for your brand name or product name. How many results do you find among the first 20 results that are user-generated content, i.e. blog posts, forum discussions, video uploads, product reviews, Q&A sites? And how many results are based on your own distributed content, i.e. own website, press releases,etc.?

Blogs:
The majority of blogs in the blogosphere are personal blogs and niche blogs which generally don’t have many views. But they are observed by peers and category specialists or found in the search engines. A good story from a small blog can create some good buzz. On the other hand, a negative product or brand comment/experience can spark the flame. The mega-blogs with million of readers certainly have a strong impact when you get some coverage there. Blog marketing is an essential part of your online marketing communication strategy and goes hand-in-hand with online PR.

Forums:
In China, traditional forums and BBS are still the leading channel of user-generated content. More users contribute to a
forum than to a social network or than write a blog. But also for other countries, forums are an equally important channel.  Forums are mostly expert communities that focus around a certain topic or category. There are always a couple of power contributors who are responsible for most of the content. But for the normal consumer, forums are a powerful and very influencing source of information. Moreover, forums have the characteristic that very few people participate, but many, may people read. Also, for marketers forums are a valuable source of consumer insights.

Reviews:
Reviews should be divided into editorial reviews and consumer reviews. Editorial reviews are often based on product samples that a marketer sends out to a blog or review site to write a profound but independent review. Oftentimes this is part of the PR strategy of a marketer. These editorial reviews oftentimes are also extremely detailed and critical. Reviewers have a high standard and lots of professional experience and see things and specs from a different point of view.

Consumer reviews on the other hand are not as detailed and deep. Often they consist just of a few sentences. But they are an extremely important influencing factor. Web pages of products listed on shopping portals or price-comparison sites which have no consumer reviews normally look very boring: Product image, specs, price. That’s it. Totally exchangable, nothing convincing. A web shop which has consumer reviews and star ratings for the products listed has a much higher conversion rates than shops that have only product data. Products with many reviews and ratings are considered popular and worth buying than products without any user experience comments.

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Social networks:
Facebook and social networks are a big hype, but when it comes to your online marketing mix you should priorize what can have a big impact and what not. Social networks should certainly be part of your online activity but expectations should be realistc. Remember that only a low percentage of Facebook pages have more than a thousand fans. And to get in the area of 100,000 fans you already must have a strong brand awareness in public life. Before you engage in Facebook be sure where your fans are and what content you can provide to them. Be sure that you have the resources to communicate with them on a daily basis.

Source: The pictures are taken from a globalwebindex presentation and  you can find them on slideshare.

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Among the findings of the report, which looked into the habits of over-60s in Shanghai and Beijing, showed that telecommunications ranks fourth after food, daily needs and payment for utilities in terms of expenditure. What’s more, 85 per cent of respondents keep in touch with their friends through email.

China’s senior citizens number 143 million. The study from Ogilvy & Mather Greater China is designed to help brands understand the spending power of a demographic with a combined annual income of up to Rmb 400 billion (US$58 billion).

The elderly in Shanghai and Beijing, shop at supermarkets (84 per cent) and hypermarkets (96 per cent). Seniors also invest in taking care of their health and taking preventive measures. Seventy-six per cent do some form of regular exercise and 39 per cent take dietary supplements and/or vitamins.

The agency says the findings have strategic business implications for brands in obvious sectors such as healthcare, but also for travel and leisure, financial services, technology, food and beverage and retail brands. Per capita spending power of Chinese senior citizens is expected to rise from US$1,620 in 2005 to US$4,112 in 2015.

Kunal Sinha, executive director, discovery at Ogilvy & Mather Greater China, said: “We want to appeal to marketers who are obsessed with marketing to youth and haven’t woken up to senior citizens in the China market. Brand managers and marketing directors usually think there are no new opportunities with the ‘aging’ profile.”

He added: “The lesson for us is evident: old people in China have changed faster than our previous beliefs about them. Brands, corporations and government agencies can either choose to treat aging as a problem, or they can view the optimism and adaptation capacity of this generation as an opportunity.”

Combining ethnographic and quantitative methods, Ogilvy Discovery launched the study in March 2008 in Beijing and Shanghai, as well as Chengdu and Foshan, a small town in Guangdong province.

Responses were collected in equal proportions from 1,100 men and women between the ages of 60-75, and 12 seniors in Beijing, Chengdu and Foshan were filmed over two days each. The 55-minute TV documentary will be uploaded to YouTube.

Source: brandrepublic

The figures – which confirm China as the world’s biggest online market by number of users – were released by the China Internet Network Information Center. Around 214 million users have broadband access.

The report also shows that China’s hitherto small-scale e-commerce sector is growing rapidly. Around 23.8 million netizens use online payment services, up 72% from last year.

It also demonstrates the potential of mobile as an online channel in China, with more than 73 million mobile web users.

Source: digitalmedia

Tier1 cities:

• In the Tier1 cities like Shanghai, Peking, Guangzhou and Tianjin live only 6% of the Chinese population. They represent 13% of the gross domestic product.
• These cities are a strong competitions in terms of (foreign) investments and some markets are already close to saturation.

Tier 2 cities:

• In the 300(!!) Tier2 cities live 53% of the urban population. They represent 64% of the gross domestic product.
• Definition of a Tier2 city: Cities with up to 6 million inhabitants and a per-capita GDP of 34,000 RMB in average.
• These Tier2 cities offer a constantly increasing consumer market with a yearly income of 3,000 to 6,000 USD per household.
• Seen as a group, the Tier2 cities grow by 15% per year. 60% of them are located close to the coastal provinces in the eastern part of China.

Offline and online sales:

• Supply chains are far than efficient for foreign companies in China. Only 10% of the turnover is sold directly via retailers, whereas 42% of the turnover reach the consumer through three or more interconnected dealers in the supply chain. The result if a lack of insight into the behaviour of Chinese consumers.
• Only very few companies have direct access to consumers and sell their products online. Examples are Anheuser-Busch or Amway.

Some own thoughts / conclusions:

• 59% of Chinese people live in cities (Tier 1 + 2) representing 77% of the gross domestic product. Reversely, 41% live in rural areas (= roughly 560 million people), they stand for 23% of the GDP .
• The Tier2 cities are of growing importance. More and more companies try to open up this huge potential. From my experience, foreign companies have their headquarters in the Tier1 cities to set up business and gain first experience. But the potential to make money lies in the Tier2 and Tier3 cities. And this is not only true for cost reduction in manufacturing but increasingly for sales and market share growth.
• Parallely, the Internet penetration increases and this will sooner or later also bring online marketing and e-commerce along.
• Interesting will be how search engine market shares will develop. Right now, Baidu has a market share of almost 100% in rural areas. In the Tier1 cities it’s market share is reduced to about 40%, Google holds some 40% as well (I wrote an article before how market shares and demographic development interact in China). Anyway, this is a question about years, I suppose. But also makes clear that search engine market shares in China are not fixed yet. A lot of space to move is still available.
• What a potential for direct sales channels and e-commerce! Anyway, still some problems to solve like nationwide use and acceptance of credit cards for online payment, reliable and quick logistics and delivery services, etc. But with young Chinese generations heavily using the Internet already now, participating in social networking and web 2.0 tools, this is a good basis for the development of e-commerce activities. Not to mention the distances in China…

Demographic trends in China show that the population is continuously increasing. The urban population which was approximately 430 million in 2001 might reach 850 million by the year 2015, and the number of cities with over 100,000 people is estimated to increase from 630 (2001) to over 1,000 (2015).

China’s urban population has grown in cities of all sizes. Nevertheless, townships of between 5,000 and 10,000 people are witnessing the fastest growth. Although efficient and effective improvements of water supply and enhancement of water treatment have progressed in China’s large cities, environmental management in the expanding towns and townships remains a challenge. Pollution in these smaller urban settings is not well monitored and their development plans include only limited provision to concentrate on.
Source: Klako

Once again the results are just amazing how heavily the Chinese users are adopted to the Internet and how intensively they use it. Advertisers in China should really have an eye on these studies as they contain very important information. And they should also raise some questions how to allocate marketing budgets, how much weight put on e.g. TV spots, how much attention on online marketing.

Embracing life online

• I live some of my life online: CN 86%, US 42%
• Online is as real as offline: CN 37%, US 16%
• I have a parallel life online: CN 61%, US 13%

Self-expression on the web

• I have expressed personal opinions and/or written about myself online: CN 72%, US 56%
• Online I feel free to do and say things I wouldn’t do or say offline: CN 73%, US 32%
• I sometimes express myself more strongly online than I generally do in person: CN 52%, US 43%

Relationships online

• It’s perfectly possible to have real relationships online with no face-to-face contact: CN 63%, US 21%
• The Internet helps me make friends: CN 77%, US 30%
• Online interactions reduce the time and attention I have for personal interactions: CN 51%, US 20%

Expanding the sexual universe

• With the Internet I am more likely to access adult material: CN 65%, US 28%
• I have made hot dates using text messages: CN 54%, US 20%
• The Internet has broadened my sex life: CN 32%, US 11%

Compare this information to my post about Online Marketing Trends in China.

1. Comparing market share and popularity of Google and Baidu in China

Throughout China, the market share of Google and Baidu has been more or less constant in the last few years apart from some minor shiftings in percentage from year to year. The market shares of 2007 don’t really offer rocking news as well, as you can see in the following graph.

But as more and more information about the Chinese search engine market become available, these numbers can be analyzed more in detail. Especially if broken down to certain areas or provinces of China the market shares of the two search engines vary heavily.

CNNIC reports that they compared market shares in different regions: North, Northeast, East, South, Central, Northwest and Southwest China, involving 3 first-class cities, 7 second-class cities, and 14 third-class cities.

The statistics indicated that Baidu.com has a rising trend as the city level falls, while google.com goes the opposite. The priority ratio for Baidu.com in cities of first, second and third class respectively: 67.33%, 73.35%, 83.82% while that for google.com: 22.11%, 14.78%, 4.99%.

The report also mentions that baidu.com and google.com drew in the priority market competition for high end users characterized by “non-student users aged 25 and above, receiving Bachelor’s Degree and above, having a monthly income of over 3,000 yuan”, 47.72% of whom selected baidu.com as first choice while 42.32% chose google.com.

2. Comparing quality of search results from Baidu and Google

Intelliconsulting, a Chinese research company, conducted a survey among search engine users and compared the search results of Google and Baidu. The overall result is that the search result satisfaction among Google users (48.2%) is higher than among Baidu users (39.8%).

If you take a closer look at the graph you can clearly find out the following facts:

• The better educated users are, the more they rely on Google.
• The older they are (and the more disposable income they have), the more they use Google.
• There is no difference among female and male test users.

More findings were:

• The more a user users search engines, the more he likes Google.
• Negative points for Google are the instability of Google’s website, having no page-caching and no free MP3 and other media search functionality.
• Negative points for Baidu are that search results are mixed with paid search results and that no content from Chinese pages abroad is included. That search results are filtered according to governmental requirements is a negative factor as well, according to the study.

Well, what do you think? Two independent researches (CNNIC and Intelliconsulting) come to almost the same conclusion. That’s impressing, as a little unusual for China.

3. Baidu Keyword Advertising (PPC)

How Adwords, Google’s paid search program, works is pretty much known I suppose, so I don’t want to go into detail too much here.

The screenshot below is from google.cn and the keyword is 汽车(car). You can see that there are several ads, one in the highlighted area above the organic search results.

Here is a screenshot from baidu’s search results for the keyword 信用卡(creditcard).

So let me explain the differences to Google:

1. The paid search and the organic results are not clearly divided. You will only notice the difference by the small gray underlined term next to the displayed URL. 推广 means it is paid search, 百度快照 means organic search result.
2. All paid search results will be placed before the organic search results. That means, if 20 customers buy the same keyword, the first organic search result will be found on page three. The price is based on a bidding process. Not only the CPC but quality factors like landing page evaluation will influence the position as well.
3. The ads in the right column are no CPC-based ads. They are fix-priced for one whole year. Position no. 1 to no.3 have the same price and rotate among each other. Position no. 4 to no.10 are cheaper than no.1 to no.3 and rotate as well. If the position is already booked, you have to reserve and wait respectively until it will become free. There is no possibility to get out of the contract before this one year ends.
4. Once a while you might notice one or two ads with a blue banner on position one and/or two. It looks similar to Google’s blue banner, but in fact it has a totally different meaning: if you search for a keyword and there are no paid results for that keyword because no advertiser has booked it, Baidu will display ads that are similar to the keyword you entered. Example: you enter ‘keyword advertising’ but there are no paid results, so baidu will show two ads for the keyword ‘advertising’ with a blue background.

Last but not least, some examples prices for the right column (as of 2007/11/15):

手机 (cell phone) 1.056.700 RMB/year
广告 (marketing) 13.000 RMB/year
汽车 (car) 117.600 RMB/year
美容 (cosmetics) 193.600 RMB/year
电脑 (computer) 16.400RMB/year

Demographics

According to the CNNIC, 18-to-24-year-olds are nearly four times as likely to be Internet users than the general population. (Source: eMarketer)

In 2006, there were 46.6 million broadband households in China, representing 12.6% of all online households. (Source: eMarketer)

The number of Internet users in China has increased from 22.5 million in 2000 to 137 million at the end of 2006, representing a growth rate of 508%. Chinese Internet users now represent 34.4% of all Internet users in Asia.

China is now only behind the US for the overall number of users online. Prediction – at the current rate of growth, Chinese Internet users will exceed the 210 million US users by 2009. (Source: eMarketer)

User Behaviour

Out of China’s Internet users, around 38 million ofthem play online games. (Source: Palava Digital)

The number of short message service (SMS) users in China is expected to reach 360 million by 2008, with an expected market value of RMB37 billion. (Source: Analysys International)

Email is an important tool for collecting opinions from peers regarding purchase decisions. 75% of Hotmail®/Windows Live Mail users in China discuss music (MP3s, CDs, etc) via email prior to purchase; 61% of men discuss car purchases; 78% of men and 71% of women discuss electronics and gadgets prior to purchasing; 69% of men and 61% of women talk about mobile phone purchases on email before purchase; and 74% of women and 59% of men exchange their ideas on clothes and accessories purchases via email. (Source: Microsoft Digital Advertising Solutions)

In a survey regarding email etiquette, in reply to the question: “which is the most impolite email habit?”, 64% of Chinese respondents said “sending chain emails”, while only 3% said “using a PDA while out with others”. (Source: Synovate)

Electronics and gadgets (74%) is the most talkedabout topic via email in China, closely followed by education (73%), travel (72%) and social arrangements (72%). (Source: Microsoft Digital Advertising Solutions)

In a survey regarding the effectiveness of different mediums, Chinese respondents said they found the Internet was the most effective in “delivering information” and “being a source of entertainment”. The Internet was not seen as being the most effective in “supporting purchase decisions”, “arousing interest” or “drawing attention”. (Source: Synovate)

In a survey regarding the consumption of news, Chinese respondents said that when a major

disaster or news story breaks, only 19% of them turn to the Internet. That’s compared to 60% of people who turn to the TV. In the past week 22% had gone online to read a blog; 18% had received news on their mobile phones; 13% had emailed some interesting news to a friend; 11% had received a regular, subscribed to news email; and 7% had accessed a news Web site that they had paid to use or subscribed to. (Source: Synovate)

Out of all Chinese mobile Internet users, 72.2% of them use their mobile phones for sending or receiving email; 30.9% for reading news and information; 19.4% for downloading ringtones, movies and games; 6.3% for logging on to communities; 5.3% for their banking; 2.6% for their own blogs and 2.3% for watching online videos. (Source: CNNIC, January 2007)

E-Commerce

China’s retail e-commerce revenues were expected to increase from US$504.3 million in 2005 to US$700.1 million in 2006. (Source: Analysys International)

China’s online travel market in Asia is expected to grow by 71% by 2010. (Source: Euromonitor)

Online Advertising

At end 2006, the market size of the online advertisement industry in China had reached

RMB1.324 billion, representing an increase of 9.53% from Q3. Revenues from key word

advertisements were RMB476 million, representing 36% of the total market and an increase of 14.4% from the Q3. Revenues from column-based advertisements were RMB751million, representing 56.7% of the total market size and an increase of 6.68% from the Q3. (Source: Analysys International)

In May 2006, 587 online display advertisers ran nearly 1,500 campaigns consisting of more than 3,700 banners. In July 2006, 817 online display advertisers ran 2,276 campaigns consisting of 5,785 banners. (Source: Nielsen//NetRatings)

During the May-September period of 2006, there was a total of 3,795 online advertisers in China, running 10,136 campaigns (at an average of 2.7 each), posting 25,023 banners and generating 285 billion ad impressions. The total ad expenditure in that period was RMB2.3 billion. Of that expenditure, 26% of it went on automotive advertisements; 23% on computers and electricals; and 10% on FMCG advertising. Just 7% of online ad spend went on fashion; 6% on auctions and classifieds; 4% on media; 3% on entertainment; and 3% on property. (Source: Nielsen//NetRatings)

During the January-June period of 2006, out of the RMB2 billion spent on online advertising, 60% (RMB 1.25 billion) went on display advertising; 33% (RMB 697 million) on search engines; and 7% (RMB139 million) on classifieds and other forms of ads. (Source: Nielsen//NetRatings)

In 1H 2006, Sina.com led the portals, owning 20% of China’s online advertisement market, worth RMB420 million in ad revenues; Sohu.com had 14% market share earning RMB290 million; Netease.com with 6% generated RMB130 million; QQ.com and its 5% earned RMB100 million; while Tom.com had 3% share worth RMB50 million. (Source: iADTracker 3.0, iResearch Consulting Group “China Online Advertising Research Report”)