Consumer attention shifts to smartphones


Joseph WebbHead of digital at TNS Asia-Pacifi c

While television sets still sit in almost every Chinese home, television no longer commands the dominance it once did. Consumer attention, especially during evening prime time, is increasingly being diverted by smartphones and tablets.

Two thirds of Chinese watch television every day, while 33 percent watch online videos daily, either on personal computers, tablets or mobile phones, according to TNS, a research firm under the Kantar division of the WPP Group.

In its most recent Connected Life report, TNS said the ratio of those forsaking television for online entertainment is higher than the global average of 25 percent.

Globally, nearly one third admit to “screen-stacking,” a phenomenon whereby they use multiple devices at the same time, for instance, using their mobile whilst watching TV.

Out of the average of 3.9 hours that Chinese Internet users spend online everyday, mobile devices make up 2.2 hours.

Joseph Webb, head of digital at TNS Asia-Pacific, sat down with Shanghai Daily in an exclusive interview to discuss the research findings and what they mean to advertisers.

Q: What’s the biggest change you see in this year’s Connected Life report?

A: The shift is toward mobile devices, with more and more lower-priced smartphones available on the market. Local handset makers such as Xiaomi and Huawei give a wider group of consumers access to online media.

Last year, we saw the trend appear in the 16-30 age group. This year, it is extending to mainstream mass consumers.

The surprising thing is the change in the media landscape brought about by the shift toward mobile. Smartphones and tablets are driving online video watching. Compared with mature markets like Europe and the US, Chinese consumers watch less TV and more online videos.

Q: Was there anything surprising in your findings?

A: Despite all the talk about China being the biggest e-commerce market in terms of money spent, it is actually very underdeveloped in terms of the proportion of people buying online. Major concerns are still security of payments and product integrity. Once information transparency is resolved and consumers feel more assured, more value can be realized through online retailing.

Q: What about attitudes toward advertising?

A: There is usually a greater level of cynicism toward advertising in mature markets. The more advanced an economy, the more consumers are bored by advertising.

But it’s different in China. Here, there isn’t such a long-term legacy because the earliest advertising dates back only about 35 years. The advertising industry has enjoyed huge growth since then, and consumers have not yet grown cynical. Maybe the next generation will be, but for now, most consumers are quite open to branding. There is a huge potential for marketers.

Q: Which advertising formats work best with consumers?

A: Brands need to fight harder to cut through the media congestion during the evening prime time, so there are three major trends at the moment. First, a quiet, focused time for the message is essential — for example, before office hours or during commuting periods. The second is finding a brand relevant to those times — working out when your message is most likely to resonate with people. A coffee brand, for example, would find the morning hours most ideal. The third trend is integration of formats, rather than just relying on a single channel.

My advice? Don’t advertise on just TV alone. You need to combine different formats to maximize the impact on people during prime times.

Technology and the media landscape in China have changed very quickly into a polarized market. Residents in first-tier and second-tier cities have the latest handsets, but some may still be using a feature phone and a sharing TV with their families.

In a recent study we did for a premium car brand, we found they were seeking to target a female audience without diluting the nature of a very masculine brand. It’s hard to achieve that through TV alone. It would be a lot easier to identify what TV shows and websites attract female audiences and then deliver a targeted message.

Q: There is a lot of discussion about dwindling TV viewership. What do you think about the role of TV sponsorship?

A: Castrol recently launched a campaign during the Chinese Idol program, where viewers vote for the candidate to keep in the game. It’s a clever move to reach a large viewing audience through sponsorship, while at the same time driving engagement through a Castrol mini-site to give viewers a further impression of how engine oil can protect a vehicle and give it better performance.

Brands are trying to use online channels to forge long-term, lasting relationships with consumers.

Only 64 percent of Chinese viewers devote undivided attention when watching TV while 36 percent are simultaneously engaged in some form of digital activity, slightly lower than the global level of 41 percent.

The growing challenge is that the number of people who exclusively focus on watching TV will get even smaller in the future. The rest will be split over various forms of media because their attention will be more fragmented. Marketers need to be prepared for TV’s role to be weakened in the future, although, at the moment, it’s still where most advertising expenditure goes.

Q: What about mobile shopping?

A: In global markets where a mobile device is the only access to the Internet, there is very little e-commerce because of trust issues.

In China, the proportion of online sales completed through mobile channels is still less than 20 percent, yet this is one of the most advanced markets for mobile commerce. There are more innovative business models here because software like WeChat offers a convenient payment channel.

This could become a big challenge for a platform like Taobao, which may see commerce increasingly turning to WeChat.

Chinese tech companies love to go it alone and are constantly trying to take other players’ market share. For example, Alibaba is adding social features to Taobao and Tmall, while Tencent hopes to catch up with e-commerce through new WeChat functions.

Marketers need to focus on categories where people are dedicating more time to research and reading online comments. It’s important to capitalize on that trend because people are more likely to pick up their smartphones and search for price and product information.

In China, categories in the lower price range — such as personal care, cosmetics, baby care and household products — are driving online research as people try to find the best deal for themselves.

Travel and personal care are the top categories where consumers are willing to engage with brands and offer user-generated content.

Mobiles also offer a good channel for brands with normally low levels of engagement because they are much easier to search and interact with.

‘More progress lies ahead’ for FTZ

Officials say crude oil futures trading may be the next innovation in zone

Officials of the China (Shanghai) Pilot Free Trade Zone on Friday promised there would be more progress, including the launch of crude oil futures later this year, ahead of the first anniversary of the experimental area.

The Shanghai International Energy Trading Center, a new arm of the Shanghai Futures Exchange, may launch crude oil futures this winter, said Zheng Yang, head of the Shanghai Financial Service Office, at a briefing on Friday.

The trading center was established last November, and it was the largest company registered in the FTZ with registered capital of 5 billion yuan ($815 million). It aims to serve as a platform for international futures trading of oil and other resources.

According to Zheng, the energy trading center is preparing for the launch of crude oil futures.

The Shanghai Stock Exchange also plans to set up a trading platform for international financial assets, said the official.

The FTZ was officially launched on Sept 29, 2013. Its major achievement in the past year has been the streamlining of administrative procedures.

The “negative list” approach, which aims to make it easier for foreign companies to enter the Chinese market, has reduced the number of banned items from 196 to 139.

As of Sept 15 this year, there were 12,266 new companies set up in the FTZ, of which foreign companies accounted for 13.7 percent, and 283 foreign-funded projects were launched in the FTZ.

“The momentum of foreign enterprises is improving, which means the free trade zone has passed the initial evaluation,” said Ai Baojun, director of the FTZ, who is also deputy mayor of Shanghai. Ai said logistics costs in the zone have declined by 10 percent.

In late October, the FTZ management committee will release another list that will refine its power and procedures, increase transparency and broaden market access for investors in the FTZ.

When asked about Dai Haibo, the former executive deputy director of the FTZ who was removed in early September, Ai said Dai’s removal was a normal change of personnel, and Dai was still carrying out his duties in the government, such as drafting the 13th Five-Year Plan (2016-2020).

Ai did not reveal the successor to Dai.

Time-honored brands eye young consumers

More than 200 Chinese time-honored brands across the country will exhibit their classic and new products in Shanghai at a fair starting from Friday, in the hope of developing popularity among younger consumers like they did in their parents and grandparents.

The four-day exhibition has been held for seven consecutive years in Shanghai, and 237 Chinese companies from Beijing, Tianjin, Chongqing, Shanghai and provinces of Guangdong, Fujian, Heilongjiang, Jiangsu, Zhejiang, Yunnan and Shandong will set up 385 booths in an area of 8,500 square meters this year.

These time-honored brands are eager to show that they not only preserve traditional Chinese culture but also keep up with times. These brands range from food and dining, clothing and accessories, to jewelry, arts, health-care, and modern service.

Some latest products, such as Warrior shoes, Seagull’s latest digital camera, will also be shown in the exhibition, and visitors will be allowed to try some of these new products.

Net foreign exchange sales ‘no problem’

The State Administration of Foreign Exchange on Thursday sought to allay worries about potential short-term capital flight, saying that the latest foreign exchange figures partly reflect increasing bank deposits in foreign currencies.

The August statistics showed that Chinese banks, for the first time in 13 months, sold more foreign currencies than they bought.

“There hasn’t been any substantial change in China’s capital inflows or outflows. The gap in the data exists in the form of growing foreign exchange deposits,” said Guo Song, director of the capital account management department at the SAFE.

Foreign-currency deposits rose by $15.4 billion last month while loans dropped $3.3 billion, according to Guo.

“It means that companies and individuals are more willing to hold foreign currencies, which is a positive change indicating that the market outlook on the exchange rate has become more reasonable,” he said.

In August, Chinese banks sold $147.4 billion in foreign currencies and bought $146.6 billion, yielding an $800 million deficit, according to the SAFE.

The regulator also emphasized taking a “prudent” approach toward the liberalization of the capital account, signaling no imminent or bold reforms in further opening the capital market.

But Guo said the SAFE will pursue the goal of gradually removing restrictions on the yuan’s convertibility, creating greater convenience and giving the market more investment freedom.

China has reduced the number of items that require administrative approval from 59 to 20 under the capital account, according to the SAFE.

The agency is studying how to liberalize the rule that imposes a $50,000 ceiling on individuals’ annual conversion of yuan to meet the growing demand for foreign currencies.

Adobe to shut China R&D unit, lay off 300, amid poor quarterly results

Computer software maker Adobe Systems Inc will shut its Chinese R&D arm, it said Wednesday.

The California-based company will maintain its China sales offices in Shanghai, Beijing, Guangzhou, Shenzhen, Hong Kong and Taiwan, Adobe said in a statement on Wednesday, but R&D operations will cease by the end of December.

Layoffs have already begun and will affect around 300 people, a person familiar with the matter told Reuters.

“Adobe’s presence in China will be focused on market development activities moving forward, and it will be dissolving and closing its R&D branch there,” the company said. “Adobe will maintain its sales presence in Shanghai, Beijing, Guangzhou, Shenzhen, Hong Kong and Taiwan.”

On September 17, Adobe reported its worst quarterly revenue for Asia in the last five years. For the three months ended August 29, sales in Asia fell 25 percent to $148.2 million.

Adobe’s overall net profit dropped 46 percent year-on-year to $44.7 million in the period.

Media reports Wednesday said that employees of Adobe will get compensation depending on how long they have worked at the company.

The company has been downsizing its business in the region in the past few years.

In 2012, the company closed its unit in Taiwan and said that its business in Taiwan would be moved to its Hong Kong branch.

Adobe, founded in 1982, makes popular software such as Photoshop and Dreamweaver.

Ningbo kicks off job fair to seek overseas talent

About 1,500 domestic companies have taken part in the fair, releasing more than 1,000 human talent and science projects. An estimated 8,000 new jobs will be introduced during the event.

Each year, the local government undertakes a survey to show the types of jobs that are most needed. This year, the city adopted for the first time a comparative study method to evaluate the city’s talent resources and competence in the regional market by researching the job markets in Shanghai, Hangzhou, Suzhou and Wuxi, all located in the Yangtze River Delta economic zone.

The survey concluded there were 587 urgent job needs, covering five economic sectors. It also showed the market demand for innovative talent is still high, as most companies are used to adopting rather than inventing new products and technologies.

Seven job positions stand out as most urgent for the city — new-material engineers, car components engineers, senior architects, e-commerce managers, fashion designers, pharmaceutical experts and automation equipment experts.

The job fair places a premium on attracting those who have acquired a master’s or a doctorate degree overseas. The local government will provide “mother care” services for such talents, offering them funds, welfare, houses, family settlement and healthcare.

Huawei most innovative domestic company: survey


SOEs lag behind private firms in terms of creativity

Shenzhen Huawei Investment & Holding Co, the parent of technology giant Huawei, unseated e-commerce giant Alibaba Group as the top innovative domestic company in the Chinese mainland, according to the findings of an annual survey released on Tuesday by global consulting firm Strategy&.

Tencent Holdings, the third most innovative domestic company on last year’s ranking, moved up one spot on the 2014 list, while Alibaba was ranked No.3 this year, ceding its innovation crown to last year’s runner-up, according to a report based on the survey.

Nearly 400 executives from both Chinese and foreign companies joined the survey, which was conducted this spring and summer.

“Huawei is probably seen as the Chinese company which most embodies innovation – not just in [the mainland] but also globally,” Steven Veldhoen, a Beijing-based partner at the consulting firm, told the Global Times after the release of the survey, referring to the rankings based on the input of business executives.

Smartphone vendors Beijing Xiaomi Technology Co, Meizu Technology Co, and electric-car maker BYD Co are new to the list of domestic innovators, among which, eight of the top 10 firms are in the high-tech or Internet arena, the report said, attributing the phenomenon in part to the highly open and intensely competitive nature of the sectors in the mainland market.

Chinese companies, particularly those expanding overseas, are increasingly turning to innovation as a significant driver of business growth.

The survey found that innovation is the first priority for 42 percent of domestic companies, compared to 21 percent of multinational firms.

In a sign that domestic companies are gaining traction in innovation, 65 percent of multinational respondents said that their companies are confronted with Chinese competitors that are just as or even more innovative, the survey results showed.

China is attaching greater importance to innovation in its reform-bound economy.

Speaking at the opening ceremony of the Summer Davos Forum in Tianjin on September 10, Premier Li Keqiang said the Chinese economy has maintained steady and sound growth in recent years, owing to reform and innovation.

“China’s innovation involves not only technology but more of institution, management and growth models,” said the premier, pledging stepped-up reforms to remove restraints on innovation by individuals and companies.

The survey also revealed concerns over the lack of innovation in the country’s State sector.

“State-owned enterprises (SOEs) are, on the whole, seen as lacking impetus in innovating their products and services,” Wang Jun, a research fellow at the China Center for International Economic Exchanges, a Beijing-based think tank, told the Global Times on Tuesday.

The monopoly positions of most SOEs dampen their zeal for innovation to achieve higher earnings, Wang said, noting that an ineffective incentive mechanism for innovation for SOE management also works as a drag on innovation in the State sector.

But with the deepening of SOE reform, which includes launch of pilot programs on mixed ownership, the level of innovation in SOEs is expected to rise, he believes.

A separate list that names the top 10 innovative foreign companies in the mainland market was also announced on Tuesday, placing Apple Inc, Samsung Electronics and Volkswagen Group China among the top three.

It is hardly a surprise that Apple tops the list, given “the ubiquity of Apple products and services, and its imitators,” remarked Veldhoen.

Baidu and CGB join hands

China’s leading search service provider Baidu Inc signed a strategic partnership agreement with China Guangfa Bank on Monday to provide better services to bank customers.

Under the deal, Baidu will use its advantage in big data and location-based service to support China Guangfa Bank to offer more tailor-made and smarter services to customers.

Beijing-based Baidu will use big data technology to carefully evaluate people’s individual needs in wealth management products so as to help the bank better serve its customers in the increasingly digital era.

Baidu will also use its deep knowledge in location-based service to help the bank to select good locations to expand its brick-and-mortar network.

More automation would boost productivity, won’t cause job losses

The remaking of China’s manufacturing sector hinges on production with a higher degree of automation and artificial intelligence, experts said at a two-day manufacturing forum ended Saturday.

China’s factory sector needs to undergo a gradual process of shifting away from its extensive reliance on labor, Luo Jun, CEO of the Asian Manufacturing Association, said on Friday at the Seventh Annual Conference of Asian Manufacturing Forum held in Weifang, East China’s Shandong Province, as he advocated the modeling of Germany’s implementation of “Industry 4.0.”

The term Industry 4.0, first introduced at Hanover Fair in 2011, has since become the cornerstone of Germany’s industrial strategy pushing for computerization of traditional industries including manufacturing.

With the application of new technologies in manufacturing, the Chinese economy will experience a new round of restructuring and recovery, Luo believes.

His comments mirror rising concerns over China’s vast manufacturing sector, with recent data revealing worrisome prospects.

The official Purchasing Managers’ Index (PMI), covering mainly big State-owned enterprises, edged down to 51.1 for August from 51.7 the month before, while the HSBC PMI, focusing on smaller private enterprises, shrank to a three-month low of 50.2 in August.

Experts also downplayed concerns about the replacement of manpower by automation and robots in the world’s most populous country.

Speaking in an interview with the Global Times during the forum on Friday, Bernhard Thies, chairman of the Board of Directors of the DKE, the official German expertise center for electro-technical standardization, also said the application of automation and artificial intelligence that will be seen in China’s industry sector will not cause big job losses.

A robotized factory sector expected in the future may weigh on the unemployment rate during a specific period of time, but it is unlikely to be a cause of sustained unemployment as new ideas and professions would be created to tackle job losses due to the prevalence of automation, according to Thies.

“I don’t think it could really be a problem, because for the time being I believe that these new trends will still be [happening in] niche industries,” Bernardo Calzadilla-Sarmiento, director of Trade Capacity Building Branch at the United Nations Industrial Development Organization, told the Global Times in an interview Friday, trying to allay fears of the predominance of machine over man.

But he noted that in the meantime the government should be responsible for designing policies and measures that would foster job-creating activities as well as sustainable and inclusive development of the factory sector.

Higher demand lifts Pearl Delta exports

Business continued to improve for small and medium-sized exporters in the Pearl River Delta in August, lifted by increased overseas demand and government policies to support foreign trade, a report said on Tuesday.

Shenzhen Onetouch Business Service Co, a subsidiary of Alibaba Group Holding Ltd, found that exporters’ confidence was positive in August.

The trade climate index stood at 102.65, with many Delta exporters reporting increased orders.

“The situation will continue to improve in the months ahead because overseas demand for Chinese goods increases at the end of each year,” said Xiao Feng, deputy general manager of Shenzhen Onetouch.

Rising orders in the past two months and stable production, labor and exchange-rate conditions helped exporters make more profits, according to Xiao.

Xiao said that government trade-boosting incentives had proven effective.

“In particular, new business models such as cross-border e-commerce and comprehensive foreign trade services have helped exporters gain more orders,” Xiao said.

The nation’s total trade increased 4 percent year-on-year to $367.09 billion in August, according to the Ministry of Commerce.

Exports to major markets including the United States, European Union and the Association of Southeast Asian Nations increased by 11.3 percent, 12.8 percent and 12.7 percent, respectively.

“The increased value of foreign trade in the past two months was mainly due to implementation of a series of government policies to support the stable growth of foreign trade,” said Shen Danyang, a spokesman for the Ministry of Commerce.

The trade increase in August followed a surge of 14.5 percent in July.

According to Shen, export procedures have been streamlined and export rebates have been improved.

“We have also introduced measures to help companies tackle financing difficulties, with credit and insurance institutes providing financial services for about 25,000 small and medium-sized enterprises,” Shen said at a press conference on Tuesday.

He said that cross-border e-commerce and comprehensive trade service business have had strong government support.

“But we are not sure that China’s foreign trade can maintain this momentum … as many uncertainties remain in the global and domestic markets and some companies face difficulties in exporting,” Shen said.