China Real Time
MACRO: Municipal Governments Distribute Vouchers to Boost Consumption
Beijing plans to distribute vouchers for winter sports.
Credit: globaltimes.cn
Local governments in many provinces and cities have begun a new round of voucher distribution to stimulate year-end consumption of travel, activities, big-ticket items, groceries and dining out.
- Beijing plans to distribute more than 30,000 vouchers for ice and snow sports.
- Guangdong province announced it would provide 100 million yuan worth of vouchers for tourism — 1 million discounted tickets for scenic spots, 1 million discounted plane tickets and 10,000 discounted hotel rooms.
- Jiangxi province is expected to distribute 6,510 coupons worth 3,000 yuan each, totaling 19.53 million yuan, for car purchases in December.
- Sichuan province is expected to distribute vouchers totaling 100 million yuan for supermarkets, home appliances and restaurants.
China’s total retail sales of consumer goods reached 4.3 trillion yuan in October, up 7.6% yy, an acceleration compared with up 5.5% yy in September. Although the government believed stimuli helped, industry observers also attributed the improvement to easier comparisons.
Industry observers believe the stimulus efforts and year-end promotions could help lift consumption in the short term, but do not think consumption and consumer confidence will truly recover until the employment situation improves.
- Joanne Zhu, Brandon Zhu
RETAIL: Imported Spirits Inventory Piles Up
Industry observers have a gloomy outlook for imported spirits
Credit:chinadaily.com
China’s imported spirits maintained double-digit growth yy during October because of easy comparisons as well as distributors stocking up for the holiday season. However, sell-through has slowed significantly since September, which has caused inventory to mount in distribution channels.
The total volume and value of imported spirits increased 12.59% and 36.19% yy, respectively, according to the customs office, led by brandy and whiskey. Brandy and whiskey were up 42.27% yy and 51.39% yy, respectively, on volume and up 39.87% yy and 25.42% yy, respectively, by value. The average price of imported brandy and whiskey decreased; the price of brandy per liter was down 1.69% yy, while whiskey decreased 17.16% yy. Whiskey imported from United States and Japan decreased most significantly in both volume and value, and the price of Japanese whisky was also adjusted down significantly.
Sales of imported spirits have tumbled since Mid-Autumn Festival at end of September, according to Chinese media outlet Jiuyejia360, and has showed no sign of improvement by far, casting a gloomy outlook for year-end holiday sales. Jiuyejia360 also found distributors from Guangdong and Fujian provinces — two of the most important provinces for imported brandy and whiskey consumption in China — had inventory pile up to 40% now for many, while inventory usually should be around 20% at this time of the year.
Distributors told the media the plummeting sales of imported liquor was not caused by trade down, but said loyal consumers have stopped buying because of the weak economy and lack of confidence. Distributors were pessimistic about imported liquor sales in 2024, too, and expected to see more liquor stores closed in 2024.
- Meredith Sun
AUTOMOBILES: November NEV Sales Remain Strong
TSLA, LI, NIO, XPEV, 175 HK, 1211 HK, TSLA, 601238 CH, 9866 HK, 9868 HK, 9863 HK, 601127 CH, 000625 CH, 2015 HK, 600104 CH, 601633 CH, 600006 CH
Industry observers express optimism regarding Aito and Leapmotor
Credit: scmp.com
November new energy vehicles (NEV) sales remained strong, but plan attainment varied.
| NEV Makers’ Key Metrics | ||||
| November Sales | January–November Deliveries | Annual Target | Attainment | |
| BYD Co. Ltd. | 301,378 | 2,672,000 | 3,000,000 | 89.06% |
| SAIC-GM-Wuling Automobile Co. Ltd.’s Wuling | 59,372 | - | - | - |
| Guangzhou Automobile Group Co. Ltd.’s Aion | 41,567 | 434,056 | 500,000 | 86.81% |
| Li Auto Inc. | 41,030 | 325,677 | 300,000 | 108.57% |
| XPeng Inc. | 20,041 | 121,486 | 200,000 | 60.74% |
| Seres Group Co. Ltd. and Huawei Technologies Co. Ltd.’s Aito | 18,827 | - | - | - |
| Zhejiang Leapmotor Technology Co. Ltd. | 18,508 | 125,537 | 200,000 | 62.77% |
| Chongqing Changan Automobile Co. Ltd.’s Deepal | 16,157 | 117,930 | 400,000 | 29.48% |
| Nio Inc. | 15,959 | 142,026 | 240,000 | 59.18% |
| SAIC Volkswagen Automotive Co. Ltd. | 15,600 | - | - | - |
| Geely Automobile Holdings Ltd.’s Lynk & Co | 15,208 | - | - | - |
| Geely Automobile Holdings Ltd.’s Galaxy | 13,770 | - | - | - |
| Geely Automobile Holdings Ltd.’s Zeekr | 13,104 | 105,182 | 140,000 | 75.13% |
| Hozon New Energy Automobile Co. Ltd.’s Nezha | 12,506 | 121,940 | 200,000 | 61.18% |
| Great Wall Motor Co. Ltd.’s Haval | 10,036 | - | - | - |
| SAIC’s IM | 8,703 | - | 45,000 | - |
| Dongfeng Motor Corp.’s Voyah | 7,006 | 40,535 | 50,000 | 81.07% |
| Chongqing Changan Automobile Co. Ltd. and Huawei’s Avatr | 4,080 | 22,712 | 100,000 | 22.71% |
Industry observers expect Seres Group Co. Ltd. (601127 CH) and Huawei Technologies Co. Ltd.’s Aito and Zhejiang Leapmotor Technology Co. Ltd. (9863 HK) to become top NEV makers. Aito has received more than 100,000 orders for its M7 model in only two and half months since the release. Orders for its M9 model has also exceeded 30,000.
Leapmotor’s C01 and C11 have become its most popular models and represented more than 80% of Leapmotor’s total sales, helping the brand enter the midrange-to-high-end market. Leapmotor’s margin is also expected to improve when it the launches C10, its first global model, in January.
NEV brands by legacy car makers have also become more competitive. Guangzhou Automobile Group Co. Ltd.’s (601238 CH) Aion, Dongfeng Motor Corp.’s (600006 CH) Voyah, SAIC Motor’s (600104 CH) IM and Geely Automobile Holdings Ltd.’s (175 HK) Zeekr have had stable sales growth during the year.
Industry observers expect NEV makers to intensify the competition in December and 2024. Observers also believe NEV makers might need to sell more than 200,000 units to survive the competition in 2024.
- David Ren, Brandon Zhu
MEDIA: Kuaishou Launches Mini-drama App
1024 HK, 772 HK
Mini-dramas have boomed in China
Credit: shine.cn
As mini-dramas boom, Kuaishou Technology (1024 HK) has launched a separate mini-drama app called Xifan, which can be downloaded from the Android system and Xiaomi Corp.’s (1810 HK) app store now.
In 2019, Kuaishou was the first leading short-video app that developed mini-dramas. Now one-half of its users watch mini-dramas on the platform and daily active users (DAU) for its mini-dramas exceeds 260 million.
Kuaishou’s mini-drama content creators have also grown quickly. During 1H23, Kuaishou had more than 130,000 mini-drama content creators, including 2,786 creators who had more than 1 million followers each. During the summer, 21 mini-dramas were viewed more than 100 million times and advertising revenue increased 10 times during 3Q23 qq.
The arena is becoming more competitive. In May, ByteDance Ltd.’s Douyin launched a free mini-drama app called Hongguo, which has 5 million DAU now, and China Literature Ltd. (772 HK) has started to recruit mini-drama scripts from all sorts of writers. ByteDance has also developed similar products to overseas market, such as TikTok’s ReelShort. So far, China has more than 20 apps focused on mini-dramas.
The popularity of mini-dramas shows attractive monetizing potential: Its business model is similar to online novels and has attracted an increasing number of subscription users. More advertisers also prefer soft implantable ads in mini-dramas on short-video platforms.
Chinese media reported more than 60 million yuan is paid in mini-drama subscription fees every day. During holidays and festivals, the revenue exceeds 100 million yuan per day. The mini-drama market is expected to reach 25–30 billion yuan during 2023.
(Also see OTR Global’s Nov. 3 report on Kuaishou.)
- Wei Ying
