The summit attracted more than 500 attendees with no empty seats. Guest speakers' backgrounds varied from famous brands companies to venture capitals, from tech-supporting companies to famous content generating platforms.
“We have long been optimistic about China’s consumption investment,” said Wu Ying (吴颖), partner of Volcanic Venture (火山石资本), also a guest speaker at the Brand Revolution Summit. This event held under the auspices of EO Company in Shanghai on June 13 is one of the sub-forums under the Global New Economy Conference 2019. It attracted more than 500 attendees with no empty seats.
Besides Wu, a professional investor once worked for IDG Capital, guest speakers from different backgrounds took part in the discussion. They are from famous brands companies such as Pagoda (百果园), Nestle and Bestore (良品铺子), from venture capitals like China Renaissance Group, Lightspeed China Partners, from tech-supporting companies like Weimob, Aikucun and Winnerinf, and from content generating platform such as Red (小红书) and Douyin (抖音).
During the summit, speakers shared their opinions on new retail, brand marketing and consumer brands. A common view on China’s future consumer marketing is positive and promising.
However, the consumption investment has continued soften in terms of fundraising cases. As the consumption business is mostly focused on to-customer (2C) market, observers may find an increasing tilt and focus on to-business (2B) side.
Alibaba’s well-known strategy of “small front desk, big middle desk” proposed in 2017 and Tencent’s recent "industrial internet" have been keenly promoting these days, leaving less space for 2C investment.
So are there any opportunities left for consumer brands?
The answer is yes.
According to Wu, the basic logic underlying this answer is threefold.
First, China's population forms a large enough consumption market. The total retail sales of consumer goods in China is same with US in 2018. With four-times larger population and three-times faster economic growth, China has already become the largest single market worldwide.
Second, consumption itself has anti-cyclical attributes, and the consumer industry deals with basic needs. Just like the lipstick effect, when economic downturn happens, it does not cut off consumption, but alters consumer behavior and boosts other businesses.
Third, technological advances have and will continue generating opportunities in new products and services. As technology has already changes consumers’ payment habit and travel mode, we will definitely see new species empowered by 5G, AI technologies, etc.
Zhao Jing (赵婧), vice president of Lightspeed China Partners said that she firmly believes a large number of Chinese Brands will emerge within the next five to ten years. In the next 10 years, about 200 million people born in the 1990s will be starting families, and about 150 million in Generation Z will transition from school or university to workforce. They are not only representing the largest consumer base, but a new consumer attitude. Comparatively less price conscious but not crazy about luxuries, personalized and have higher standards for convenience, quality and variety, digital-savvy and openness to sharing, etc. Opportunities are embedded in this transformation of attitude.
Ye Shanshan (叶珊杉), the CMO of Red, shared the hot topics in 95s and 00s. Words such as “ways of keeping good health” and “healthy recipes” not online surprised but also amused the audiences.
The essence of consumption issue actually lies in people, Ye’s speech is also a know-your-customer (KYC) lecture for many entrepreneurs.
In the end, Wu from Volcanic Ventures shared three suggestions in consumption market:
Firstly, seek incremental opportunities for demographic shifts in consumer demand.
Secondly, consumer brands and platforms with closer user connection will have more opportunities.
Last but not least, apply digital strategy for major elements of the value chain.
Quoting from a World Economic Forum report, “The next 10 years will be a period of rapid change across almost all consumption categories in China. To succeed, businesses will need to make agility in innovation a core competency. Agility will allow them to ride the wave of winning trends without being the first-movers. They will also need to be just as quick to exit losing trends without the long, drawn-out processes typically associated with incumbents."