2023 Calendar Week 47

Posted on November 20, 2023

1. According to the M2 performance, Chinese government will persist with its supportive monetary policy and a low interest rate

On November 13, the People’s Bank of China (PBOC) released statistics indicating that as of the end of October, M2 stood at CNY 288.23 trillion, reflecting a 10.3% year-on-year increase. This growth rate remained consistent with the end of the preceding month, showing a 1.5 percentage point decrease from the corresponding period in the previous year. Over the initial ten months of the year, CNY loans surged by CNY 20.49 trillion, with an additional CNY 1.68 trillion year-on-year. In October alone, CNY loans saw a spike of CNY 738.4 billion, marking an additional CNY 105.8 billion year-on-year.

Preliminary figures reveal that in the first ten months, the Accumulated Fiscal Revenue Expenditure (AFRE) totaled CNY 31.19 trillion, surpassing the same period last year by CNY 2.33 trillion. For October, AFRE reached CNY 1.85 trillion, an increase of CNY 910.8 billion from the corresponding period in the previous year

New CNY loans in a single month (trillion), blue-2022 year, purple-2023 year

The stock of AFRE grew by 9.3%, compared to the previous rate of 9.0%. Meanwhile, M2 exhibited a 10.3% year-on-year increase, slightly below the anticipated 10.5% and consistent with the previous rate. M1 showed a 1.9% year-on-year growth, slightly lower than the previous rate of 2.1%.

Short-term loans for residents experienced a notable negative increase, coupled with the negative CPI in October, suggesting a marginal weakening of consumption. Conversely, residents’ medium- and long-term loans increased slightly, potentially linked to the improvement in second-hand housing sales. Enterprises’ medium- and long-term loans showed a consistently lesser year-on-year increase for the fourth consecutive month. Bill financing experienced a sharp upturn, characterized by a significant surge in volume.

Additionally, the M1 growth rate declined for the sixth consecutive month, indicating a persistently feeble activation of corporate funding. While China’s economy has stabilized, the recovery process may encounter challenges. The slope of improvement should not be overestimated, and the likelihood of continued policy adjustments remains high. A further reduction in the fourth quarter and the interest rate window remaining open are distinct possibilities.

Data Source: 前10月人民币贷款同比多增1.68万亿元——金融支持实体经济质效提升_部门动态_中国政府网 (www.gov.cn)

2. The GMV has not been released yet, but there are still some surprises in the niche sector

The yearly Double Eleven event has concluded, and the main e-commerce companies did not release the purported GMV data. This year’s total consumption during the Double Eleven sales event was still substantial.

The beauty and personal care sector has consistently been a significant contributor to the annual Double Eleven sales, with Chinese domestic brand Proya surpassing international giants L’Oréal and Lancôme for the first time, claiming the top spot in the beauty rankings and pushing Estée Lauder to fourth place. From the overall trend perspective, breaking free from the dependence on super-popular live streamers and establishing their own self-livestreaming platforms is a more explicit development direction for brands.

The beauty rankings witnessed the emergence of more domestic brands, such as Comfy and Timage, both making their debut in the top 20 beauty brands by transaction volume on Tmall’s Singles’ Day. Proya, hailed as a shining example of domestic success, not only historically surpassed the overseas giant L’Oréal but also secured the top spot in Double 11 beauty sales. The overall growth rate of domestic beauty brands significantly outpaced that of international brands, with some experiencing double or even triple-digit growth. In contrast, international brands like L’Oréal, Lancôme, Estée Lauder, and Olay consistently recorded declines. Japanese and Korean brands were notably absent from the top 10 rankings. According to brokerage estimates, this year’s GMV growth for international beauty brands exceeded -20%, while domestic beauty brands achieved an overall growth rate of approximately 10%.

Rankings: 1st Proya, 11th Comfy, 19th Timage, 25th Nars, 43rd Dior, 44th Chanel

Simultaneously, this year witnessed a trend on e-commerce platforms such as Taobao and JD.com, leaning towards mid-tier brands in terms of traffic. Traditionally, these platforms favored higher sales volume, with higher GMV leading to more significant traffic allocation. However, this year’s platform strategy underwent a comprehensive shift, tilting the traffic towards higher sales volumes. Essentially, the more a product sells, the higher the traffic it receives, utilizing a strategy of “quantity in exchange for price” to retain existing users. This approach often aligns with the promotion of lower-priced products.

The beauty live-streaming sector this year displayed a healthier trend, despite most domestic brands achieving rapid growth. The growth was not solely reliant on super-popular live streaming rooms. The proportion of self-livestreaming aligns more closely with the high growth rate, indicating a decreasing dependence on live streamers. It is worth highlighting that Proya ‘s high growth was achieved with a significant proportion of self-broadcasting, maintaining around 50%. Other brands, such as Marubi and Kans, have self- livestreaming proportions of 77% and 56%, respectively. In contrast, Comfy has a relatively lower proportion of self-b livestreaming, standing at 26%, primarily due to TikTok’s “Guangdong Couple” driving substantial sales.

These performances are closely related to the structural changes in the live-streaming industry. Previously, KOL, especially super-popular live streamers, were the guarantors of brand sales. In 2020, domestic brand Dr. Yu achieved over 70% of its live-streaming GMV through Austin Li’s live stream. However, this year saw a shift in the wind. Whether it was the previous Huaxizi incident or the subsequent waves of low-price agreements, consumers became aware of the nuances behind the “lowest price” in live-streaming rooms. Super-popular live streamers, almost monopolizing the entire industry, continued to raise commission rates, siphoning off most profits. It is foreseeable that this distorted consumer channel will not last long. Additionally, major platforms are becoming entangled in low-price competition, gradually weakening the low-price advantage within live-streaming rooms. More brands are recognizing the need to avoid excessive reliance on live streamers and are exploring new marketing methods. For instance, Kans gained prominence through self-produced TikTok short dramas, experiencing a breakout in the TikTok channel, ranking second in the TikTok skincare GMV, just below Proya and ahead of L’Oréal in third place.

This phenomenon has led to a realization that the industry seemed to have fallen into the trap of super-popular live streamers, as if they were the only guarantee of sales. However, the success of brands like Proya and Kans proves that through quality products and innovative approaches, brands can attract and retain consumers without relying on super-popular anchors.

3. Bidden and Xi meeted in San Francisco U.S. on Wednesday and agreed to resume high-level military cooperation

The meeting between the heads of state from China and the United States in San Francisco concluded on the morning of November 16th, Beijing time. In contrast to the previous year’s meeting in Bali, the two nations refrained from releasing a joint statement but instead issued extensive official briefings to the public. Both parties characterized the meeting as “frank” and “constructive,” highlighting key points of agreement. The meeting succeeded in fostering a positive atmosphere, especially given the heightened distrust between China and the United States and the diminishing sense of amicable relations.

The bilateral agreement between China and the United States encompasses several significant initiatives. These include the establishment of an intergovernmental dialogue on artificial intelligence, the formation of a China-U.S. anti-drug cooperation working group to address anti-drug efforts, and the resumption of high-level communication within the military. This involves the China-U.S. Department of Defense working meeting and the Maritime Military Security Consultation Mechanism meeting. Leaders from the combat zones of both militaries engaged in calls based on principles of equality and respect, with plans to significantly increase the number of flights early next year. Furthermore, there is a commitment to expanding exchanges in education, culture, sports, international students, youth, and business.

The discussions openly addressed divergent opinions, with President Xi Jinping elaborating on his steadfast stance on the Taiwan issue. He urged the United States to move beyond verbal support for Taiwan’s independence, emphasizing China’s belief in the inevitable reunification.

Both the Chinese and U.S. briefings extensively employed phrases such as “endorsed by the two leaders,” “emphasized by the two leaders,” “welcomed by the two leaders,” and “reaffirmed by the two leaders.” The statements reflect a shared commitment to improving bilateral relations by mitigating further disagreements and building on positive aspects, despite existing differences.

A paramount objective for both nations is to prevent any further deterioration in their relationship, particularly with a focus on averting military tensions or conflicts in China’s coastal waters. Avoiding miscalculations with potentially dire consequences is deemed essential.

4. Agency survey: Chinese e-commerce companies Temu and Shein approaching Amazon in U.S. users

Nihon Keizai Shimbun, in collaboration with the U.S.-based research firm data.ai, conducted an analysis of monthly active users and app downloads for prominent e-commerce applications on a global scale.

Examining the overall global subscriber count for October, Amazon demonstrated a 4% year-over-year growth. In contrast, the combined total for Temu and SHEIN experienced a remarkable surge, reaching 2.6 times their previous count.

The report highlights a substantial increase in the user base of Chinese e-commerce platforms such as “Temu” and “SHEIN” in the United States. In October, the combined user count for these two apps reached approximately 110 million, quadrupling within a year and nearing 90% of the user base of the largest platform, Amazon.com.

In terms of global market share percentage, Temu and SHEIN outpace Amazon in the U.S. (Market Share by downloads, U.S.), commanding 41% and 18%, respectively, while Amazon holds 15%. Notably, Temu specializes in grocery sales, while SHEIN offers a diverse range of products, with a primary focus on clothing. The newly acquired U.S. downloads for these apps are nearly five times that of Amazon.

This data indicates a significant shift in consumer preferences and app usage patterns in the U.S. e-commerce market, with Chinese platforms gaining substantial traction and challenging the dominance of established players like Amazon.

5. The number of new businesses, 89,000, has boosted in 2023 over 2022, indicating that 5G is a fast-growing market.

The rapid evolution of information technology in recent years has placed considerable emphasis on the development of 5G technology. According to data from Aiqicha, nearly 260,000 enterprises in China are presently engaged in ventures related to 5G.

Trend in the number of 5G-related business registrations in the past five years

In the year 2022 alone, approximately 79,000 new businesses entered this domain. Remarkably, as of November 13, 2023, the number of newly registered businesses has reached around 89,000, surpassing the total registrations for the entire year of 2022. This notable surge signifies a robust and accelerating interest in 5G-related ventures.

Geographical Chart(Province): 1st Guangdong, 2nd Hainan, 3rd Sichuan

Examining the past five years, there has been a consistent upward trajectory in the registration of enterprises associated with 5G. This growth trend, which gained momentum in 2018, has seen a particularly significant upswing in 2020. The increasing number of businesses entering the 5G sector underscores the industry’s dynamism and the widespread recognition of its potential in driving technological advancements and economic growth.


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