Isentia China¹s Digital Economy_Presentation_Feb

CHINA’S
DIGITAL
ECONOMY
FEBRUARY
2016

欢迎
• China
• China’s digital economy
• The Great Firewall
• Social Media
• Online shopping
• Australia through Chinese eyes
China’s digital economy

PEOPLE’S
REPUBLIC
OF CHINA
A MARKET OF
A
PEOPLE
GDP
IN 2015 IN COMPARISON TO AUSTRALIA’S 2.5%
IN THE WORLD
1.37 BILLION
US$11.2 TRILLION
7.3% GDP GROWTH
LEADING TRADING NATION

16,764,455 BABIES
BORN IN CHINA IN
2014

THE
EXPONENTIAL
GROWTH
OF CHINA’S
ECONOMY
1952
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
1952 1952 1952 1952 1952 1952 1952 1952 1952 1952 1952 1952 1952
67.9 billion in 1952
Korean War Great Leap Forward Cultural Revolution Market-based economic reforms since 1978
Farm Privatization
Shenzhen SEZ
1997 Asian Financial Crisis
18232.1 Billion in 2005
Shanghai SEZ WTO Entry
PEOPLE’S REPUBLIC OF CHINA’S NOMINAL GROSS DOMESTIC
PRODUCT (GDP BETWEEN 1952 TO 2005
GDP(INBILLIONSOFRMBYUAN)

CHANGING
FACE OF
GLOBAL
ECONOMICS
40%
30%
20%
10%
0%
1820
1830
1840
1850
1860
1870
1880
1890
1900
1910
1920
1930
1940
1950
1960
1970
1980
1990
2000
2010
%OFGLOBALGDP
19%
2%
2%
2%
6%
27%
16%
33%
15%
16%
- USA - Europe - China - India - Latin
Source: Angus Maddison, University of Groningen, OECD, data post 1980 based on IMF
data (GDP adjusted for purchasing power parity)

CHINA AND
THE USA
SEATTLE
DENVER
CHICAGO
DALLAS
BOSTON
LOS ANGELES
SAN FRANCISCO
MIAMI
NEW YORK
ATLANTA
URUMQI
LHASA
XIAN
KUNMING
BEIJING
HAERBIN
SHENYANG
TIANJING
NANJING
SHANGHAI
CHONGQING
TAIPEI
GUANGZHOU
HONG KONG
WASHINGTON DC

Image credit: East Meets West: An Infographic Portrait by Yang Liu

CHINESE
DIGITAL
LANDSCAPE 74%ONLINE NEWS
87%INSTANT MESSAGING
77%ONLINE SEARCH
ONLINE USAGE
2013
2014
81%
83.4%
2013
2014
81.7%
80.9%
ONLINE ACTIVITY
21.5% 77%
MARKET DOMINANCE

THE INTERNET
CANNIBALISES
OTHER MEDIA
FORMATS
Time (minutes) spent on each media per day
Source: JWT Shanghai
32
29
28 8 9 10
170
162
150
54
48
45
168
196
217
NEWSPAPER MAGAZINE RADIOTV INTERNET
2012 2013 2014
TIME IN MINUTES SPENT ON MEDIA PER DAY

THE BIG
THREE
Source: JWT Shanghai
MONTHLY ACTIVE USERS TOTAL REVENUES IN FISCAL YEAR 2013
500 MILLION ON MOBILE BAIDU SEARCH BY JULY 2014 $5.2 BILLION
$5.5 BILLION
$9.7 BILLION (RMB 60.4 BILLION)
27 MILLION ON MOBILE REPORTED IN JUNE 2014
819.8 MILLION ON QQ IN Q3 2013
SOCIAL NETWORK + MOREECOMMERCE + MORESEARCH ENGINE + MORE

TWO DOMINANT
PLAYERS IN
WECHAT AND
SINA WEIBO
Source: Tencent and Sina
468 167MILLION MILLIONMONTHLY ACTIVE USERS MONTHLY ACTIVE USERS
Video killed the... @isentia @spence7zero

EVOLUTION
OF MESSAGING
Frequency of Communication
HIGH
LOW HIGH
Contacts
FREQUENCT INTERACTIONS WITH
SMALLER GROUP PF CLOSE CONTACTS
BROADCASTING FEWER MESSAGES TO LARGE AUDIENCES
Source: Anjney Midha, KPCB Associate; Jared Morgenstem, KPCB Entrepreneur Partner

WECHAT –
APPS WITHIN
AN APP
• MESSAGING
• MOMENTS
• PHONE CALLS
• VIDEO CALLS
• CONFERENCE CALLING
• MESSAGE IN A BOTTLE (DRIFT)
• STICKERS
• PAYMENTS AND GIFTING
• WALLET
• LOCATION BASED MARKETING
• TAXI

13.3 MILLION
FOLLOWERS

Video killed the... @isentia @spence7zero
• Presented to Chinese
President Xi Jinping on his
visit to Tasmania
• 65,000 visitors per year to
Bridestowe Lavender Farm
• Sales of more than 40,000
bears per annum
• Online tag of authenticity
check
• Bobbie the Bear the TV Show
for ABC International
Source: Tencent and Sina
BOBBIE
THE BEAR

CHINESE
ECOMMERCE
• 20,000 Chinese domiciled
ecommerce businesses
• 5,000 online shopping
platforms
• $US1 trillion digital economy
2/3 the size of Australia’s
whole economy
Avg. Buzz 27034
ONLINE SHOPPING POSTS BY INDIVIDUAL PURCHASE AGENTS
WITH REGARDS TO AUSTRALIAN VITAMIN PRODUCTS
19960
14802
15098
16807
18756
22704
25292
29893
42701
47104
37532
33757
11.11 Online
Shopping Festival
& 12.12 Online
Shopping Festival
Source: Isentia China; Quarter 2, FY 2015
0
10000
20000
30000
40000
50000
March April May June July August Sept. Oct Nov Dec Jan Feb

THE SHOPPING
FESTIVAL AND
SINGLES DAY
• Singles Day is 11 November
each year
• Biggest shopping day in the
global calendar
• US$14.3 billion in 2015
including US$5 billion in the
first 90 minutes
• US$1.6 billion for Black Friday
and Thanksgiving combined
Products cheaper than usual
Online Campaigns
Discount Coupon
Freshness
Wider selection of items
To save time
0% 5% 10% 15% 20% 25% 30% 35% 40%
35%
19%
17%
13%
11%
5%
REASONS FOR SHOPPING DUIRNG ONLINE
SHOPPING FESTIVAL
Source: CNNIC

77.8%
50.2%
41.2%
53.1%
39.6%
35%
40.8%
30.7%
29.1%
Clothes & Shoes ElectronicsPhone Credit Groceries Consumer Health
WHAT ARE
PEOPLE BUYING
ONLINE IN
CHINA?
Source: Kantar Media, 2014

CHINA &
AUSTRALIA
94% OF CHINA’S
POPULATION
LIVES ON THE
EASTERN SEABOARD

0
5000
10000
15000
20000
25000
March April May June July August Sept. Oct Nov Dec Jan Feb
Health A Health B Health C Health D Health E
AUSTRALIAN
CONSUMER
HEALTH –
MARKET ANALYSIS
By way of example and
to test the relative impact
of Chinese social media and
online shopping on Australian
products and services Isentia
tracked mentions and products
offered for sale in China from
five competing Australian
domiciled consumer health
organisations.

SENTIMENT OF
AUSTRALIAN
BUSINESSES
Sentiment in comments
and approval generally
over Australian consumer
health products was very high,
due in large part to
the perceived safety of
products sourced from
Australia and New Zealand.
Health A
Health B
Health C
Health D
Health E
Industry
0% 10% 20% 30% 40% 50% 70%60% 80% 90% 100%
9.14% 89.32%
80.74%
98.57%
66.16%
78.04%
55.64%
31.65%
14.34%
27.34%
16.12%
Negative Neutral Positive Very Positive

Brand mentions
40000
Health A
Health B
Health C
Health D
Health E
80000 120000 160000 200000
94678
39,202
20069
59803
54566
32623
Product
Discussion %
Brand
Discussion %
Product Discussion
39%
58%
72%
69%
68%
61%
42%
28%
31%
32%
PRODUCT
VERSUS
BRAND IN
CONVERSATION

KEY WORDS AND
PHRASES

Source: Business Insider
THE GREY MARKET
ECONOMY
BLACKMORES’ ASIAN BUSINESS IS WORTH
$84 MILLION PER ANNUM BUT THE
BUSINESS ESTIMATES THAT DOMESTIC
AUSTRALIAN SALES FOR ‘GREY MARKET’
RESALE IN CHINA ADDS A FURTHER $70
MILLION PER ANNUM

WHERE ARE
PURCHASE
AGENTS FROM?
MORE THAN ONE THIRD OF ALL
PURCHASE AGENTS SELLING
CONSUMER HEALTH PRODUCTS FROM
AUSTRALIAN DOMICILED BUSINESSES
LIVE IN AUSTRALIA
AUS
96% OF PURCHASE AGENT ACCOUNTS
ARE UNVERIFIED

AUSTRALIAN
ORGANISATIONS
ON SINA WEIBO

CHINESE
AUSTRALIAN
COMMUNITY
POPULATION
DISTRIBUTION
Source: Monash City Science

Source: Weibo.com
SINA WEIBO IN
AUSTRALIA
• SINA WEIBO IS THE 6TH MOST VISITED
SITE IN CHINA AND THE 63RD MOST
VISITED WEBSITE IN AUSTRALIA
• 368 MILLION GLOBAL USERS OF WHOM
600,000 ARE DOMICILED IN AUSTRALIA
• 71% OF THE CHINESE AUSTRALIAN
COMMUNITY HAVE A SINA WEIBO
ACCOUNT

AUSTRALIAN
ORGANISATIONS
ON SINA WEIBO
There are 10,000 Australian business
accounts, for example:
RMIT
ABC
International
Westpac
Tourism
Victoria
IG Markets
Tennis
Australia
Tourism
Australia
Monash
University
Commonwealth
Bank
Source: Weibo.com

AUSTRALIAN
USE OF
CHINESE
SOCIAL
CHANNELS

ISENTIA
UNLOCKING
CHINA

ISENTIA
UNLOCKING
CHINA
Understanding China
A monthly update on social media activity and the Chinese digital
economy and specifically how it impacts on the ANZ market.
Insight
Who is talking about your brand and services or selling your products?
How do you position against local and international competitors?
Engagement
Targeting Chinese consumers either in the PRC or domiciled in Australia.
Establishing accounts and profiles on Sina Weibo and WeChat.
Monitoring
Ongoing monitoring of conversations and online sales for your brand,
product or service.

Isentia China¹s Digital Economy_Presentation_Feb

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