Winning in China Insights and Strategies For Success in 2011 en

Insights and Strategies For Success In 2011
WINNING IN CHINA
Insights and Strategies
For Success In
2011
2010 was a banner year for China. The
country surpassed Japan to become the
second largest economy in the world,
with GDP growing by more than 10
percent, and per capita income rising
almost 11 percent. Exports were up 31
percent, while domestic demand posted
strong gains as well. By most measures,
the Chinese economy continued firing
on all cylinders.
Naturally then, companies both local
and foreign were focused on developing
strategies for succeeding in a market
that is diverse, growing in affluence
and sophistication, and with consumers
eager to spend. There is no one size
fits all strategy, but there is one theme
common to companies winning in China
today: innovation.
Innovation may be an over-used word,
especially when it comes to business,
and it can have many meanings. But
no matter how it is defined, it is whats
driving growth in the country. Long
gone are the days when an overseas
company could simply slap a new
Chinese label on a product successfully
marketed in the U.S. or Europe and
knew that it would sell here too. Or
that a local brand was automatically
presumed to be of lesser quality.
Chinese consumers are more discerning
than ever before. So whether it is
developing new flavors or fragrances
or opening research & development
facilities specifically geared toward this
market, companies know that they have
to work harder to get their share of
market.
Along with all of the positives, we
also saw some dark clouds appearing
on an otherwise bright economic
sky around the middle of the year:
inflation, especially with respect to the
prices of food and other basic staples.
Consumer confidence also took a hit.
At 108 in the first quarter of the year
(and up to 109 the next quarter), the
consumer confidence index fell to 100
in the fourth quarter. While the decline
was cause for some concern, it was
not entirely unexpected: confidence
was already high and could not go
up indefinitely. As it stands, even at
lower Q4 levels, Chinese consumers
confidence remains among the highest
in the world.
Finally, one recurring theme we found
throughout the sectors we cover is
the rise of consumers in the lower
tier city and rural areas. Consumers
in Tier 3 and 4 cities increasingly are
asserting their growing buying power,
presenting powerful opportunities
and new challenges for retailers and
manufacturers alike. For much of the
year, consumers in these areas had
higher levels of confidence than those
in the major cities. Whether this trend
will continue in the face of inflation
(these consumers will likely be relatively
harder hit because a higher percent
of their income goes toward food
purchases) remains to be seen, but they
seem set on spending new discretionary
income on products that improve
their lives and those of their families.
Throughout this book, we will address
what these consumers are seeking and
how companies can appeal to them.
As one of the first information firms
to enter mainland China more than a
quarter century ago, Nielsen has the
track record, the presence, and the team
to be one of the foremost experts on
how Chinese consumers are watching
and using media and what products
and services they are buying. This
second edition of China Market Insights
compiles in one place the trends, data,
and insights that Nielsen observed
Karthik Rao
Managing Director
The Nielsen Company
Greater China
Karthik Rao was appointed as the Managing Director, Nielsen Greater
China in March 2011. In this role, Karthik oversees client service and
product management for Nielsen in Greater China. He is driving
Nielsens commercial strategy, new business development; and
integrated solutions to help clients succeed. Karthik brings a wealth of
experience, leadership and a diverse perspective to this role.
Most recently, Karthik successfully led Nielsens Consumer Research
and BASES (leading innovation consultant) organization for Greater
China, Asia Pacific, Middle East and Africa, and India, where he led
efforts to transform client engagement and helped drive significant
growth in the business.
Karthik joined Nielsen in 2000, working with the Nielsen BASES
business in the US, before moving back to Asia in 2007 to take on
leadership roles, first in Japan and then in Singapore.
Prior to joining Nielsen, Karthik spent several years with Ogilvy &
Mather Advertising in India. Karthik is a graduate of Indias Loyola
College, where he received his bachelors and masters degrees in
Economics. He also received an MBA from Illinois State University in
the USA.
across the many sectors we cover in
China. It also provides a preview of
the trends our experts see for the year
ahead. Were proud to play a role in
helping a wide range of companies, both
local and foreign, develop and realize
their strategies for winning in China. If
anything is certain, its that the Chinese
economy and its consumers will
continue to forge ahead, and Nielsen
is continually expanding the ways we
track and analyze the market. Drive
Client Success is our goal and we
hope you find WINNING IN CHINA -
Insights and Strategies For Success In
2011 a useful reference that can help
you win in China.
How Companies Win
Integrating insights from
what consumers buy
and what consumers watch
The Nielsen Company captures
the rising opportunities
and growth from
untapped consumer demand.
Contents
Part 1 Insights Into What Chinese Consumers Buy 1
1.1 Riding the Back of the Chinese Dragon: Consumer Condence in 2010 5
1.2 Succeeding in a Vast Marketplace: FMCG Trends in 2010 11
1.3 The Push-and-Pull Relationship of FMCG Manufacturers and Retailers 21
1.4 The Chinese Automotive Sector Races Ahead in 2010 33
1.5 Legendary Savers Take It To The Bank 43
1.6 Taking Off: Chinese Eager to Travel 53
Part 2 Insights Into How Chinese Consumers Watch 59
2.1 One Screen Not Enough for Chinese Consumers 63
2.2 Digital TV In China 75
2.3 We Live Online: Internet and Social Media Trends in China 81
2.4 On the Go: Chinese Mobile Trends in 2010 109
Part 3 How To Win In China 121
3.1 The Next Great Frontier: Chinas Lower Tier Cities 125
3.2 Unlock the 8 Common Myths About Innovation in China 137
Appendix 142
1. 2010 China Market Beat 143
2. China Consumer Condence Index by City Tier 144
3. City Tier Denition 146
4. China GDP overview (2007-2010, by quarter) 151
5. 2010 China CPI by category 152
6. 2010 Cash income of Chinas Rural and urban households 154
7. 2010 Expenditure of Chinas Rural and urban households 156
8. 2010 FMCG Top 10 Categories 159
9. List of Tables 160
Nielsen Key Contacts 163
PART 1:
Insights Into What
Chinese Consumers Buy
1.1 Riding the Back of the
Chinese Dragon: Consumer
Condence in 2010
4
Dene & Reach Your Consumer
accurately reach them across platforms through the integration of
Consumer Behavior Information and Media Consumption Data.
5
Over the course of 2009, Chinese
consumer confidence rose steadily,
according to Nielsens Global
Consumer Confidence Index, and at
the beginning of 2010, that rise seemed
set to continue. Indeed, during the first
quarter of the year, Chinas score hit
108 a four point rise from the last
quarter of 2009. The second quarter
of 2010 added another point, making
Chinese among the most confident and
87
90
81
96
89
94
104
109
100
99
97
94
88
84
77
82
86 92
93
90
108
106
100
83
82
80
80
84
82
85
87
81
105
106
98
95
101
108 104
60
70
80
90
100
110
2nd
Half
'06
1st
Half
'07
2nd
Half
'07
1st
Half
'08
2nd
Half
'08
1st
Quart
'09
2nd
Quart
'09
3rd
Quart
'09
4th
Quart
'09
1st
Quart
'10
2nd
Quart
'10
3rd
Quart
'10
4th
Quart
'10
Global Average US China
optimistic consumers in the world.
The third quarter of 2010 brought an
end to that upward trend, however, as
consumers started to feel the effects
of inflation. Despite the five-point
decline, a score of 104 still ranked China
amongst the most confident nations.
A small drop was hardly surprising:
confidence could not rise indefinitely,
and price inflation, particularly with
respect to food, was increasingly
Down, But By No Means Out
Consumer Condence Index
1.1
Riding the Back of the Chinese Dragon: Consumer
Condence in 2010
Source: Nielsen Consumer Confidence Index
6
Looking Forward:
Expect the first part of 2011 to
show continued consumer concern
about inflation.
Consumers in lower tier cities
will continue to show higher
confidence.
becoming an issue for many. Also,
government initiatives to curb real
estate speculation and a tightening
of interest rates were also starting to
come into play. The fourth quarter
saw another decline to 100 as
inflationary pressures mounted.
Confidence Beyond Tier 1 Cities
While rural consumers were more
likely to feel the immediate impact
of inflation, their confidence over the
course of the year was actually higher
than that of consumers in Tier 1 cities.
Largely due to the effect of rising
wages, consumers living in Tier 3 and
4 cities, as well as those in rural areas,
were increasingly more optimistic
about the economy, the state of their
personal finances, job prospects, and
willingness to shop. On a regional basis,
consumers in the Central part of the
country showed the highest confidence,
while those in the West were the least
confident.
7
96
89
95
104
108
109
104
100
98
101
95
105
106
2nd
Half '06
1st Half
'07
2nd
Half '07
1st Half
'08
2nd
Half '08
1st
Quart
'09
2nd
Quart
'09
3rd
Quart
'09
4th
Quart
'09
1st
Quart
'10
2nd
Quart
'10
3rd
Quart
'10
China Consumer Confidence Index
Ride On The Back Of The Chinese Dragon!
108
106
105 105
107
111
109
101
98
100
104
117
104
101 101
104
102
106
100
95
98
95 95
107
National Tier 1 Tier 2 Tier 3 Tier 4 Rural Areas
10 Q1 10 Q2 10 Q3 10 Q4
Rural Condence Remains Higher Than Urban
4th
Quart
10
8
9
1.2 Succeeding in a Vast
Marketplace: FMCG Trends
in 2010
10
Marketing ROI
Nielsens Marketing ROI Solution integrates large-scale
consumer purchasing and media consumption data to
provide Return-On-Investment analysis.
11
Rapid economic growth and
development in China has produced
consumers with higher levels of
disposable income and an appetite for
shopping. Whether buying food at the
local grocery or choosing a new TV at
a hypermarket, Chinese shoppers are
becoming more demanding. Beyond
the major cities, a fast growing middle
class is fueling a rapid expansion of
the retail scene. With such a diverse
and massive marketplace, makers of
fast-moving consumer goods (FMCGs)
manufacturers and retailers need to
know who their shoppers are, what they
are seeking and how to effectively reach
them if they want to stay at the top of
their games.
Chinas Massive FMCG
Marketplace
Recent global and national economic
trends have upended the fast-moving
China: The 2nd Largest FMCG Retail Market In Terms Of Outlet
Counts Across The Asia Pac Region
1.2
Succeeding in a Vast Marketplace: FMCG Trends
in 2010
India
China
Indonesia
Philippines
Thailand
Sri Lanka
Korea
Malaysia
Taiwan
Australia
Vietnam
New Zealand
HongKong
Singapore
Around 3.3 million*
HIGHLY
FRAGMENTED
MARKET
(*Nielsen Dened China, excluding villages, non covered regions, non covered channels)
Source: Nielsen Retail Census
12
consumer goods (FMCG) market in
China. To succeed in this market, FMCG
companies must prove they can be
both demand- and innovation-driven.
Marketers must confront sophisticated
Chinese consumers with innovative and
unique product offerings.
Today, China ranks as the second-
largest FMCG market in terms of store
count in Asia (after India). While the
traditional grocery store continues to
dominate the scene in terms of total
number of stores, the modern trade has
grown ten times in the course of the
past nine years. Whats more they are
selling much more than groceries.
Sales Share/Count Share
Grocery Modern Modern/Grocery
Tier 1 and 2 0.59 12.19 21 X
Tier 3 cities 0.59 12.25 21 X
Tier 4 Cities 0.67 14.64 22 X

FMCG Sales Value Share

Modern Trade
Grocery
Other

Store Count Share

Channel Productivity
Sourse: Nielsen Retail Measurement
While FMCG Grocery Trade Dominates The Landscape, Modern
Trade Productivity Is Twenty Times Higher
The key to succeeding in this market
is the same as elsewhere: know your
consumer and execute with precision.
Applying the right initiatives to the
right shoppers at the right time leads to
sustainable success:
The Right Shoppers & Trips
The Right Store Experience
The Right Products & Placement
The Right Value...
all of which builds stronger
relationships.
13
FMCG, Know The Shopper
What are their shopping
motivations, attitudes, habits and
drivers?
How do they navigate around
the store to find your brand?
Do you know what their decision
process is for selecting your
category/brand?
Do you know who they are?
Do you know how to maximize
your product assortment to get
your most profitable product/brand
in their shopping basket?
out from the crowd and attract the new
sophisticated Chinese consumer.
The Fixed vs. the Flexible
Marketplace
Todays Chinese consumer is far more
agile and flexible than in previous times.
Chinese consumers are quickly moving
key purchases from stores to the online
arena. E-commerce is thriving; China
online sales estimated to have reached
400 billion RMB by the end of 2010
with exponential growth forecasted
beyond.
Consumers online experience with
packaged goods begins before the
actual point of purchase. Increasingly,
consumers are conducting their own
online research when considering
important purchases. They are
consulting online consumer review sites
and leveraging online social networks
for opinions on brands, products, and
value. According to a Nielsen global
study, fully 64 percent of Chinese
consumers consider online opinions
important when buying consumer
electronics and 48 percent look to web
advice for purchasing cars.
The Power of Innovation
Not long ago, marketers operated in
an environment with little competitive
supply and unlimited consumer
demand. This imbalance favored
FMCG producers, who were able to
leverage the lack of consumer choices
into profitable operations on limited
costs. The tables have since turned.
Product offerings have multiplied,
new companies have expanded, and
widespread distribution has improved
all dramatically increasing supply.
Demand, on the other hand, has
contracted, and FMCG marketers are
in a fierce competition. To distinguish
themselves in the oversupplied market
and win customers, companies must
develop innovative products that stand
14
Ready, Willing and Demanding
Chinese consumers today are conscious,
demanding, and in power. They have
money to spend and are willing to try
new products using new channels.
FMCG marketers willing to invest in
product innovation, understand the new
marketplace, build a strong brand and
leverage Chinas emerging markets will
be well positioned to succeed in this
new demand-driven economy.
Winning Tips for Capturing
Shoppers Demand and
Maximizing In-Store Performance
Segment shoppers and
identify their unique shopper
personalities.
Connect shoppers in-store
navigation with the layout planning
and let them govern the in-store
location of various point-of-sales.
Change the design and
merchandising principles according
to shoppers interaction before
shelf.
Identify the most valuable
mission by retail customer to
develop a stronger shopper-focused
value proposition and win more
shoppers.
Take consumer demands
on product specifications
(function, flavor, etc.) into careful
consideration when driving on-shelf
assortment.
Leverage consumer differences
by geographies in order to capture
the highest available sales with
product assortment.
15
Products promoting health and
wellness from either the benefits
attained from consuming the
product or the natural ingredients
will see solid growth.
While all FMCG manufacturers
are online, expect them to take
their game to the next level to take
advantage of the strong growth in
ecommerce.
Chinas retail sales will be three
times that of Japans by 2015 and
four times that of Indias.
Despite higher prices, the
demand for premium brands and
products remains solid.
Looking Forward:
The pursuit of consumption
growth is taking the next battlefield
to the lower city tiers. Sixty-five
percent of FMCG sales already
come from Tiers 3, 4 and 5 and
these sales are now growing twice
as fast as in Tier 1 and 2. Gaining
rapid distribution, building effective
supply chain and ensuring optimal
in-store execution will be the key
to success for both retailers and
manufacturers.
Chinese consumers aspirations
and needs are changing rapidly.
Product functionality is no
longer the main purchase driver;
indulgence and convenience are
gaining importance as Chinese
consumers lifestyles evolve and
expectations rise.
3
1he Size o 1he lrize
161 million 1ier 3 and 4 households are Lhe nexL ronLier
1ier 1
16 million households
1 Lrillion income value
1ier 2
1ier 3
/S million households
1ier 4
1ier S
18
19
1.3 The Push-and-Pull
Relationship of FMCG
Manufacturers and Retailers
20
Retail & Shopper Strategies
Integrating our breadth of information, Nielsen Retail
and Shopper Strategies help retailers and
manufacturers optimize use of in-store space,
addressing factors such as Channel Selection, Site and
Market Selection, Shelf Space and Assortment levels.
21
1.3
The Push-and-Pull Relationship of FMCG
Manufacturers and Retailers
Source: Nielsen l Assortman Benchmark China Hypermarkets by region 2009 vs 2008
Consumers Are Looking For More Premium + Mass Products And
New Products In All Geographies
Today, Chinese consumers have more
choice than ever before. With almost
a half million items for sale, how can
retailers and manufacturers narrow
those down and offer the right selection
for the consumer who, on average
purchases approximately 240 types
of products? Every year, it seems that
manufacturers introduce more and
more new products, or variations on
existing ones. Retailers have the task
of choosing the 12,000 or so they want
to stock. Each year, they change out
about half of the items available. It is
critical then that they know what kinds
of products consumers want and have
them available.
For example, shoppers from all parts
of the country are interested in new,
premium and mass merchandise
products.
22
Premium+Mass
Consumer
Demand
Consumer
Demand
Consumer
Demand
Consumer
Demand
# item on
Shelf
# item on
Shelf
# item on
Shelf
# item on
Shelf
Economy
New Product
North West South East
Source: Nielsen Assortment Benchmark Total China Hypermarkets 2009 vs 2008
Industry Trends Conflict With Consumer Desires
1
For the purposes of this study, key cities included Beijing, Shanghai, Guangzhou, Shenzhen, and Chengdu. Non key-cities included
Nanjing, Wuhan, Shenyang, Tianjin, and Fuzhou.
Our research shows that industry
trends are not matching up with
consumer desires:
Fast-moving consumer goods (FMCG)
marketers need to know how to
maximize their product assortment
to get the most profitable product/
brand in a shoppers basket. They can
do this by using consumer demand
of specific product specifications to
increase sales as well as recognizing
and understanding the importance of
geographic specifications of consumers.
Retail Shopping Trends in China
China has emerged from the economic
downturn strongly, but Chinese
consumers have changed their shopping
habits, perhaps for good and for good
reason: skyrocketing prices, particularly
for food, will be felt until inflation returns
to reasonable levels. Nevertheless, the
retail environment continues to grow, and
retailers know that understanding the
latest shopping trends is critical for their
ongoing success.
Shoppers Are Habitual And
Highly Sensitive To Promotions
And Pricing
More than half of shoppers in a
recent Nielsen study said they
tend to visit the stores they shop
in regularly and the ones that are
23
geographically closest to their homes.
However, recommendations from
friends, colleagues or relatives along
with attractive deals promoted in
newspapers or flyers were influential for
one in five shoppers.
A change in the economic climate has
increased shoppers sensitivity to both
promotions and prices. In fact, one-
third of shoppers in both key cities
and non-key cities actively search
out promotions within their regular
store, one-fourth buy different brands
because of promotions and one-fourth
of non-key city and one-fifth of key city
shoppers will change the stores they
shop to find the best promotions.
About one in four shoppers know
the prices of all the items regularly
purchased and half of key city
shoppers and 44 percent of non-key
city shoppers know the prices of most
items.
Private Label Acceptance is
Growing in China
Private label has come a long way in
recent years and support of the retailer
brand continues to grow more positively
each year. And while non-key city
shoppers are more accepting compared
to key city shoppers, the overwhelming
majority of key city shoppers recognize
private label as a worthy choice. Fully
64 percent of key city shoppers believe
that private label quality is just as good
as leading brands.
Most shoppers still believe, however,
that branded products are superior.
Sixty-four percent of key city shoppers
and 74 percent of non-key city shoppers
say that private label products may
be cheaper, but overall, manufacturer
branded products are a better value for
the money.
Private label image is still an issue for
most shoppers as 60 percent think
private label products are only for those
on a serious budget. Retailers have an
opportunity to improve perceptions as
well as better market their brands as
64 percent say they dont know enough
about private labels to make them
switch from their usual brands.
Competition is Fierce
The China retail environment is
becoming increasingly competitive
and retailers need to contend for
share of wallet with increasingly fickle
consumers. Nielsens Shopper Trends
study provides a comprehensive
overview of the retail environment
and insights to help manufacturers
understand todays Chinese consumer
shopping habits; the brand equity of
retailers; and opportunities for future
growth.
24
Winning in Retail = Winning in
the Rising Rural Regions
Chinas recent economic development
has been both swift and gradual.
While the vast economic growth is
unmistakable, the regional manner
in which it was administered and
facilitated by the state has produced
tiered cities and towns in different
stages of market development. As a
result, lower tier markets still hold
huge potential for manufacturers and
retailers in the FMCG sector. In these
areas, economic liberalization happened
later than in the Tier 1 cities like
Shanghai, Beijing, and Guangzhou, and
they represent a huge opportunity as
emerging markets.
To capitalize on this opportunity, both
multinational and local marketers need
to understand the intricacies of these
lower tier markets. To leverage the
emerging markets in Chinas lower tier
regions, marketers will need to think
about these populations differently
than in the past and balance their
resources accordingly.
0.99
0.95
1.04
1.08 1.08
1.11
Tier 1 Tier 2 Tier 3 Tier 4 Tier 5 TG/TS
The New Growth Opportunities Are Now The Lower Tier Cities And
This Is Where Retailers Are Investing More On New Stores
Source: The Nielsen Company
25
retail chain
The Leading Chains Have Already Switched Their Attention And
More Than 60% Of Their Stores Are In City Tiers 3 To 5

Key Shopper Differences By City Tier
26
Expanding to lower tier cities presents
retailers with several challenges,
including:
Selecting the highest potential
cities: a combination of factors must be
evaluated, including GDP, household
disposable income, population density,
city development outlook as well as
logistical factors such as growth pattern
of modern trade, infrastructure and
rental costs.
Winning shopper loyalty: Lower tier
shoppers tend to visit a store for the
entire experience, not simply purchasing
goods. An emotional connection is vital.
Once they find stores they like, they
tend to stick to them, which is positive
since they make more trips than average.
Retailers need to enter cities early and
build high awareness.
Store format strategy: Different
formats meet different needs, so knowing
the consumer is essential. Retailers have
been experimenting with new formats
such as the community market, with
more space for the mall area than the
typical hypermarket and can become a
one-stop shopping and entertainment
venue, or neighborhood stores, which are
focused on convenience.
Effective marketing mix strategies:
Retailers need to become the shoppers
best friend and neighbor, as consumers
in lower tier cities tend to place
greater importance on interpersonal
relationships. Stores can build those
relationships by sponsoring community
events. In terms of assortment, retailers
need to find the right balance between
local and national products with food
categories requiring a greater emphasis
on local tastes (45%-60% of food should
be local). Retailers should also use the
opportunity to introduce new concepts,
trends or products from higher tier cities.
Promotion mechanisms need to be simple
and direct.
27
Looking Forward:
Shoppers have become more
price-sensitive than in the past,
and will likely continue to be so
given inflation. Expect to see
them shop multiple retailers to
find the best prices.
The traditional battle between
local and multinational stores is no
longer that important. Both have
the same goal: to get shoppers in
their stores.
The lower tier cities will see a
huge expansion in retail locations.
Those that build awareness and
stock the right mix of merchandise
will be most successful.
28
29
Consumers are looling or more
Prem|um + Mass Products and
New Products
in all geographies
Lust
100
61
40
West
9I
90
61
100
6I
36
North Nort
96
86
43
lremium + Muss lroducts New lroducts Lconomy lroducts
30
31
1.4 The Chinese
Automotive Sector
Races Ahead in 2010
32

33
Chinas economic growth has led to
massive expansion across all consumer
categories as its citizens become more
affluent, and, in many cases, have
discretionary income for the first time.
But one sector stands out for growth
even in China: automobile sales. Over
the past five years, China was the only
country in the world to achieve annual
growth of more than 20 percent, and
in 2010, car sales reached 17.9 millions,
1.4
The Chinese Automotive Sector Raced Ahead in
2010
grew 30%. The big story, however, is
not the size of that growth sales of
cars will consistently increase for the
next few years but where that growth
is coming from: Chinas lower tier cities.
Source: Global Insight World Car Industry Forecast Report, Mar.2010 / 2010 is forecasted / Light vehicle only
China Is The #1 Market And Will Continue To Grow
20%
18%
Others, 7%
US, 18%
North
America (wo
US), 3%
South
America, 6%
Western
Europe, 20%
Eastern
Europe, 5%
Asia Pacific
(wo CN), 18%
China, 23%
China South America Asia Pacific
(wo CN)
Eastern Europe North America
(wo US)
Western Europe US
34
With private vehicle ownership still
low in China, the number of first-time
car buyers will increase sharply in the
next few years. In Tier 1 cities such as
Shanghai and Beijing, car owners are
starting to trade up good news for
luxury models. But these markets have
already reached a degree of maturity
and sales have stabilized. The real
opportunity for car makers lies in Tier
2, 3 and 4 cities such as Shandong,
Fujian and Guangdong, where the
middle class is growing every year and
their confidence as consumers has been
rising faster than in Tier 1 cities.
Reaching New Car Buyers in
Lower Tier Cities
Manufacturers and retailers must
understand the differences between the
needs of consumers in lower tier cities
compared with those in Tier 1 cities and
must approach these price-sensitive car
buyers creatively by focusing on brand
building for the long-term. To better
understand these new car consumers,
Nielsen took an in-depth look at this group
and the factors and needs that drive their
purchase decisions. Lower tier car buyers
tend to be older than those in Tier 1, and
their families are their top priority. Work is
42% 30%
Mongolia
40% 30%
Chongqing
22% 10%
Beijing
23% 29%
Fujian
5% 26%
Guangdong
30% 23%
Liaoning
23% 23%
Zhejiang
42% 19%
Hebei
8% 11%
Shanghai
22% 10%
Tianjin
Car Sold
per 1,000 People CAGR
24% 17%
Shanxi
40% 27%
Shandong
39% 29%
Henan
29% 20%
Jiangsu
51% 29%
Sichuan
'05-'07 '07-'09
Source: Car sales from Government information
Population from National Bureau of Statistics of China
Long Term Growth Will Be Driven By Developing Inland Provinces
35
viewed as a way to increase their familys
quality of life, and they tend to have fewer
financial pressures. In short, they have
positive outlooks on life and are confident
about their futures.
Auto manufacturers and retailers need
to market to these consumers by finding
emotional linkages with their priorities and
satisfying their basic needs. They would do
well to emphasize fundamental needs to
consumers such as economical, durable, safe,
reliable, simple and plain exterior. Its also
necessary to build a trustworthy brand image
that offers high value.
Local brands are quite popular with lower tier
buyers, as are cars made in Korea and Japan.
These buyers are often not familiar with the
differences between locally-made vehicles
and those produced by joint ventures. Indeed,
pricing is among the top factors for these
car buyers, and they often regard features
viewed as must haves by car owners in larger
cities, such as automatic transmissions, sun
roofs and leather interiors, as unnecessary.
Moreover, many see Chinese brands through
the prism of patriotism and are happy to
show their pride by owning cars made by local
companies.
If the brand is known to many people - it must be good g
Many cant tell the difference between domestic & JV brands
JV brands do not have a big advantage over domestic brands
Lower car prices bring higher value for money for practical buyers
Being a Chinese brand gives a sense of patriotism
Dealer network is supported by intensive advertising and promotions
Brand Awareness & Perception
Source: Nielsen
36
0
25
50
Domestic brand
JV brand
Domestic Brands: Friendly, Economical & Equally As Fashionable
Ad Effi i ( S l / Ad S di )
Ad Efficiency ( Sales / Ad Spending )

Low Tier:
Sichuan
x 4
High Tier:
Jiangsu
Zhejiang
Shandong
Fujian
,d >d
g
Beijing
Guangdong
Shanghai
Fujian
Hebei
Henan
Inner Mongolia
High Tier 2005 2006 2007 2008 2009 CAGR
Sales (M) 289 336 420 404 535 17%
Ad Spending
(MM RMB)
1,291 1,807 2,377 2,598 2,412 17%
Low Tier 2005 2006 2007 2008 2009 CAGR
Sales (M) 208 266 326 349 604 31%
Ad Spending
(MM RMB)
290 422 572 609 686 24%
Advertising Delivers Maximum Impact In Low Tier Regions
Source: Nielsen
37
Since lower tier consumers have little
experience with or knowledge about
cars (90% are first-time buyers) and
have limited information, their purchase
decision-making is relatively simpler
and quicker. Manufacturers and retailers
should use a range of media including
the Internet and social media as well as
physical displays at various locations.
Dealer network expansion and training
of the sales and service associates will
further enhance brand visibility and
reputation key factors important to
lower tier consumers.
The Auto Industry Drives Ad
Spending
Mirroring the growth in car sales in
China has been advertising spending.
From 2009-2010, the auto industry
posted the highest growth in spending
of any industry, up 24 percent and
indicative of the increased level of
competition between manufacturers.
But that high level of spending has
led to decreased efficiency in mature
markets whereas lower spending in
lower tier markets has yielded strong
results.
Marketing
Activity
Brand
Equity
Sales
How much does my Brand Equity contribute to sales?
In automotive industry, brand equity

e plains 30 35%of Total Sales 30 35% 30%
Sales generated
explains 30-35% of Total Sales. 30-35%
of all buyers who buy your brand made
the purchase decision because of the
strength of your brand equity
70%
30%
Total
Sales
Sales generated
by brand equity
*Source: Nielsen Analytic Consulting Benchmark Study
Source: Nielsen Analytic Consulting Benchmark Study
Brand Equity Is A Crucial Component To Long Term Growth And
Success Of Manufacturers
38
Given this marketing environment, car
makers need to focus on long-term
growth by consistently advertising to
build brand equity. Marketing helps
build market share in the near-term,
but also helps grow brand equity in
the longer term. Without incremental
activities to bring in new buyers and
respond to competitive activities, brand
equity will erode. Nielsen research
indicates that up to 35 percent of total
auto sales are based primarily on brand
equity.
Winning the Next Decades
Electrification Game
With government initiatives in place
to reduce dependence on imported oil
and cut CO2 emissions, electric vehicles
(EVs) represent the next big opportunity
for auto makers in China. Consumer
awareness and purchase consideration
is not low, but the market is still in its
infancy.
We expect real growth will start in
2012, as the introductory demand stage
launches with a ramp-up in the production
of EVs and subsidy policies taking effect.
Once that happens, what will car buyers
look for? And how can manufacturers
offer vehicles that will appeal? Makers
should initially focus on micro and small
passenger vehicles to appeal to urban
dwellers that travel limited distances and
are concerned about parking. Family cars
that offer extensive range (100-200kms),
a short charge time, long battery cycle
and reliable performance will also prove
popular. Moreover, we see significant
opportunities for manufacturers to meet
institutional buyers demands: maximizing
efficiency and return on investment via
smart fleet purchases.
But before all of this occurs, a number
of bottlenecks need to be resolved in
terms of technology, cost and charge
infrastructure. The type of technology
(hybrid versus electric) needs to be
determined, with the most locally
adaptable solution critical. Additionally,
local government and the State Grid
need to build a battery charging network
catering to these vehicles if they are to be
successful on a large scale. Much of this
work is already under way. A key proposal
of the Twelfth Five-Year Plan is a $12
billion investment in new energy vehicles.
With these and other developments,
Nielsen expects that EVs will account for
more than eight percent of all new car
sales by 2020.
39
Looking Forward:
Double-digit growth in sales will
continue for the next decade.
The big city markets are mature
and face challenges such as parking
costs; Lower tier cities will propel
growth with few of these challenges.
Electric and hybrid vehicles
will continue to slowly increase in
popularity in 2011. But their appeal
is on the basis of being more fuel
efficient and economical overall.
Environmental concerns are a
secondary motivator for buyers.
Expect real growth to start in 2012.
Social network such as Microblogs
are important to buyers making
purchase decisions: What car brands
do friends and family members like
and why?
40
41
1.5 Legendary Savers
Take It to the Bank
42
MIN MAX
Brand & Portfolio Management
We work with you to maximize your product and brand
portfolio - including Brand Ad Category Assessments, Positioning
and Messaging Evaluation and Strategic Portfolio Alignment.
43
For decades, Chinese have been
legendary money-savers. Nielsen data
consistently shows that one of the top
uses for spare cash has been saving
or investing money. While economic
theories suggest that countries
experiencing a strong GDP like China
should see a drop in savings rate as
people are better able to predict their
future incomes, that has not (yet)
happened here. Chinas savings rate is
the highest in Asia and substantially
1.5
Legendary Savers Take It to the Bank
higher than those of the United States
and United Kingdom Perhaps driven
by the Confucian values of thrift and
frugality, the Chinese penchant for
saving money remains strong. But
one other factor probably explains
this trend better: the need to save for
life-stage expenses such as buying a
home which is almost a pre-requisite
for marriage, owning a car, childrens
education and eventually retirement.
0 10 20 30 40 50 60 70 80
National
Tier 1
Tier 2
Tier 3
Tier 4
Rural Areas
<30
30-39
40-49
50-59
60+
Low Income
Mid Income
High Income 70
69
43
41
49
53
63
63
63
63
66
46
63
56
Source: Nielsen Consumer Confidence Survey 2010
Those Mentioning Intention To Put Their Surplus In Savings
44
Given the countrys recent prosperity,
it is not surprising that four of Chinas
largest banks rank in the worlds top
ten. Chinese consumers use retail banks
primarily to safe keep spare cash and
earn interest. Nielsen surveys show that
79 percent of consumers maintain a
savings account and 87 percent have a
current deposit account.
With penetration of basic banking
services fairly high, banks must
compete more aggressively to win new
accounts. Consumers have essentially
three choices of banks to choose from:
National banks with expansive
branch networks
The Importance Of Providing Good Service Is Recognized By Banks
As Evident In Their Core Statement, However, How To Deliver It Is A
Challenge
National commercial banks, which
may offer better services, but dont
have the branch network important to
many
Provincial/city banks, which have
even fewer branches, but may offer
more locally oriented services
With cash being king, banking in-
person at branches is the most
common way of banking, and the size
of a banks network ranks as the top
factor for Chinese choosing where to
bank. Today, China boasts more than
100,000 branches. Branches tend to
perform a range of basic functions
used by the vast majority of consumers
Mission Slogan/Positioning
By your side, as your trust
Excellence pursuer, prevail forever
Grow with you
Chose BOC, realize your dream
Change for you
Provide superior financial services
Provide better services for our clients
Provide better financial solution and
keeping in creating shared value
Communication circulation, eternal
integrity
Services to urban and rural areas
Coordinated development of efficiency,
quality & scale
Diversified services for world class bank
45
which makes them, comparatively,
less efficient. Greater use of online
and telephone banking can help banks
leverage branch for higher order
banking functions like financial advise,
wealth management, etc.
At present, local banks enjoy a
significant advantage in the market.
Spontaneous awareness of the biggest
foreign banks in the country such as
HSBC and Citibank was highest in Tier
1 cities such as Shanghai, but even
in these large cities, familiarity only
resulted in seven percent awareness
(Shanghainese were most likely to
be aware of the foreign banks with
21% recognition). Foreign banks were
perceived to have superior customer
service and high efficiency, suggesting
they should differentiate themselves by
highlighting their high levels of service
and building a connection to Chinese
consumers so that they recognize the
benefits they may be able to offer.
Online banking, which has become
commonplace in the United States,
Europe and even Hong Kong, still has
ample room for growth in mainland
China: 43 percent of bank customers
use such a service. Telephone banking is
used by 21 percent of bank consumers.
So where are the next big opportunities
in retail banking?
1. The fast-growing affluent class: In
2008, there were 1.6 million wealthy
households. Around 30 percent live
in Chinas four largest cities, although
the newly wealthy tend to come from
smaller cities. Most (80%) are under
age 45. By 2015, Chinas household
wealth is expected to more than double
to $35 trillion, with most of the wealthy
residing in Tier 3 and 4 cities. They are
increasingly sophisticated in terms of
financial products and services.
2. The emerging middle class: this
group is big and getting bigger! Banks
can reach this group by differentiating
themselves through life stage
financial planning: getting married
and buying a new house, saving for a
childs education, supporting parents
and eventually, retirement. These
consumers require a range of financial
products and services to help them
meet these life milestones.
3. Rural banking: a vast opportunity
exists for those banks venturing beyond
the largest cities up to 750 million.
Both local and foreign banks are
pursuing business in these communities,
although there are risks: the cost to
serve is high due to the cash-oriented
nature of banking in these locales, as is
credit risk since land is not mortgaged
and loans are not secured.
In the Tier 1 and 2 cities, opportunities
for banks stem from VIP banking
services that require a minimum deposit
threshold of approximately Rmb
300,000. By offering special attention
and services apart from focusing on
short wait times at branches banks
can appeal to affluent consumers by
46
promoting a broader array of financial
products such as investment and wealth
management services.
Usage of VIP banking continues to be
gain traction: of the 22 cities Nielsen
surveyed, 14 percent of respondents
used VIP banking, with the greatest
percentage in Tier 1 cities at 21 percent.
Of consumers in Tier 2 cities, nine
percent use VIP banking.
In Tier 3 and 4 cities, the large Chinese
banks priority is establishing the
distribution network. Cities that were
previously too small or not affluent
enough to warrant large branch
The Use Of VIP Banking Increased Moderately, And Mostly From
Tier 1 Cities
10
13
8
14
21
9
2008YUser 2010Y User
17 Cities Total Tier 2
Tier 1
%
Source: Nielsen 2011 Personal Finance Monitor Report
Winning Tips for Banks
Huge opportunities exist in all
city tiers: In Tier 1 and 2 cities,
product penetration is relatively
high; gain market share via
differentiation.
Channel usage is skewed toward
branches: Opportunities exist for
banks to significantly enhance
use of online, ATM and telephone
banking for basic banking services,
easing pressure on branches and
allowing them to focus on higher
order services.
Good service is the most
important factor influencing
customer choice after branch
47
Ownership Of Credit Cards
networks are now getting attention.
Citizens in those cities now have more
banking choices than ever before.
Pulling out the Plastic: Credit
Cards
Despite being a cash-focused society,
Chinese are increasingly using credit
cards. There are more than 200 million
cards issued, but that represents just 35
percent penetration. After several years
of strong growth, the number of new
cards issued has decelerated over the
past year.
This slow-down in growth is prompting
card issuers to become more innovative
2540 5183 7723
35
45
30
65
55
70
Credit Card
holders
Non-holders
%
22 Cities Total Tier 1 Tier 2
/Base: All respondents in 22 cities
Base: All respondents in 22 cities
coverage: Customers perceive little
difference in service among the big
banks.
Customer experience is
delivered through every touch
point. It is important to deliver
high-quality service beyond
branches to enhance brand equity.
Strong customer service equates
to strong brand equity, higher
acquisition rates and greater
customer loyalty.
48
to differentiate their cards from others
by offering users discounts, credit
points or cash-back schemes. Of the 22
cities Nielsen surveyed in its Personal
Finance Monitor 2010-2011 study,
Tier 1 cities saw a 45 percent card
penetration rate, with Shanghai leading
the way with 58 percent. Tier 2 cities
posted a 30 percent penetration rate,
with consumers in Hangzhou having
the highest penetration (54%) and
those in Zhengzhou having the lowest
(18%). From a demographic standpoint,
penetration was highest among
consumers aged 25-34, in married
households with no children and in
those with monthly incomes greater
than RMB 8,000. Men and women
showed similar card holding (37% and
34%, respectively).
Two-thirds of cardholders have more
than one credit card, with the average
consumer having 2.7. While this
would seem like good news for credit
card issuers, think again: 72 percent
of cardholders pay their balances in
full each month, and they do that
primarily by visiting their local bank
branch. Installment payments and cash
advances are also not that popular in
China, with consumer usage of just 16
percent and 35 percent, respectively.
But if Chinese consumers were going
to use installment payments, they
would be interested in doing so to buy
information technology and home
appliances (58% and 54%).
Looking Forward:
Expect competition in the credit
card market to remain fierce as
issuers roll-out innovative schemes
to attract a bigger piece of a
shrinking pie.
Growth opportunities for banks
and credit cards are greatest beyond
Tier 1 cities: Tier 2 cities still have
ample room for growth while Tier
3 and 4 cities are at the beginning
stage of growth.
Banks/credit issuers should take
the steps to educate consumers
in lower tier cities about financial
products and credit.
All of this suggests that although credit
card penetration is high, users remain
committed to being prudent and living
within their means.
49
1.6 Taking Off: Chinese
Eager to Travel
52
?
Develop Pricing Simulations
Develop modeling services
Leveraging our extensive data
that guides you through
pricing decision
Brand Value
Market Position
The Blueprint of your Pricing Decision
Analytic Consulting
Pricing & Sales Modeling
Leveraging our extensive store-level data, Pricing and Sales
Modeling helps you develop actionable pricing scenarios
with a robust understanding of Competitive Interactions,
Proftability Impacts and Optimal Pricing Points.
53
When the global recession hit, tourism
was one of the first sectors to suffer.
Airline and hotel bookings collapsed
as cash-strapped Americans and
Europeans stayed home or took more
modest holidays in their own countries.
But one group provided some level of
relief to hoteliers and airlines: Chinese.
According to the National Tourism
Administration, 57.4 million Chinese
crossed the border in 2010, up more
than 20 percent from 2009
1
. And that
number is expected to hit more than
100 million by 2020. Top destinations
were Hong Kong, Macao, Taiwan, Japan,
Korea and Southeast Asia. Not only are
more Chinese traveling abroad, they are
spending more. Spending on holidays
grew 20 percent from 2008 to 2010,
while spending on business trips was up
38 percent during that period, according
to Nielsens Outbound Travel Monitor.
Leisure was the top reason for traveling,
with group travel to destinations
throughout Asia popular. But Chinese
are increasingly leaving Asia for
destinations further afield in Australia,
Europe and North America. China
actually overtook France to become
the fourth biggest tourism spender in
1.6
Taking Off: Chinese Eager to Travel
2009, according to the World Tourism
Organization.
2
Meanwhile, the Chinese
also surpassed the British as Australias
most valuable tourists, pouring
AUD$3.1 billion into the economy,
according to Australias Department of
Resources, Energy and Tourism.
3
Who is Traveling?
Young professionals with higher
incomes make up the key group of
tourists. National holidays are the most
popular times for Chinese to take trips
abroad. More than half of outbound
tourists use a traditional agency to
book their travel, although online
agencies are gaining in popularity.
The Internet has already become an
important source for travelers searching
for information about their destinations
prior to departure.
Ctrip.com and Travel.Sohu.com are the
most frequently visited travel websites.
In terms of sharing their opinion, 19lou.
com and club.sohu.com are the places,
where travelers are talking about
outbound travel experience.
1
Peoples Daily, January 20, 2011
2
CNBC, December 9, 2010
3
Xinhua, March 11, 2011
54
Online Is A Major Channel For Travel Information.
Source: Nielsen Outbound Travel Monitor 2011
Source: Nielsen 2011 Personal Finance Monitor Report
80
61
Leisure Business
Leisure
Searching Online
for Information
(%)
Information Channel (%)
Online Portal
Online Travel Agencies site
Online Search Engine
Online Travel Agent
Word of Mouth
Travel Vertical Search Engine
Travel Agent
Online site of NTO
Online site of Hotel or Airline
Newspaper/Magazines
Purchased travel books
Free Pamphlets
Promotion posters
TV/Radio
Tour guides
49
39
35
33
29
28
27
27
27
24
24
22
22
20
15
Website
BBS
Blog
Micro-Blog
SNS
Search Engine
Customers Seek Destination Information And Other Travelers
Experiences Abroad
55
When traveling abroad, Chinese like
to visit the usual sites and attractions,
but more than anything else, they like
to shop. The appreciation of the Yuan
has help propel the Chinese to become
the largest group of shoppers in Europe,
beating the Russians, according to
research from Global Blue, a tax-refund
and shopping services provider, which
also found that Chinese tourists spent
an average of 744 on shopping more
than double spent by Russians.
4
But Chinese tourists favorite shopping
destination continues to be Hong Kong.
According to research conducted by
Nielsen in 2010, 22.7 million tourists
Destinations Beyond Hong Kong And Macao Are Increasingly
Popular For Both Leisure And Business.
Source: Nielsen Outbound Travel Monitor 2011
from the Mainland visited Hong Kong,
accounting for 60 percent of all tourists
to the city. They spend on average
$1,500 each trip.
Who is Visiting HK, and What
are They Doing There?
Mainland tourists to Hong Kong come
from all regions of China and they are
there to shop. They tend to be between
the ages 2544, married, educated and
earn an above average income. Most
(80%) travel to Hong Kong in small
groups of four or less, typically families.
Four-fifths of Mainland tourists visit
HK specifically to shop for clothing,
4
China Daily, February 28, 2011
51
28
7
5
6 6
8
4
6
4
5 5
3
5
2
3
2 2

Hk MC Ik 1W AU I SG US 1H DL G8 M N2 kk CA I1 NL CH LS 8k
2008
2010
36
11
10
5
4
8
6 6
3
7 7
3
2
4
1 1
2 2
1 1

nk MC Ik 1W AU I SG US 1n DL G8 M N2 kk CA I1 NL Cn LS 8k
2008
2010
Destination for Leisure
(%)
Destination for Business
(%)
16
7
2 3
2 2
2
1
1
2
9
3
56
electronics and other products. In fact,
more than twothirds planned their
purchases prior to visiting HK. High-
ticket items dominated shopping lists,
with cosmetics and skincare products
the key categories (61%), followed by
electronics/photographic products
(52%), clothing (45%) and jewelry/
watches (38%). More than half of the
approximately US$1,500 they spend on
each trip is allocated to shopping.
When planning their trips, prospective
Mainland visitors usually take
recommendations from friends and
family first (48%) followed by visiting
the Internet (47%) to consult message
boards, forums and blogs.
Looking Forward:
Chinese tourists will increasingly
holiday beyond Asia, with Africa and
Middle East newly in favor. Japan will
likely be avoided until the country
stabilizes after the earthquake and
tsunami.
Specialty tourism is bound to
rise, with a focus on skiing, golfing,
adventure sports and even medical
tourism.
More tourists from lower tier cities
will take their first trips abroad, with
a focus on trips within Asia.
Expect to see a rise in domestic
tourism.
57
PART 2:
Insights Into How
Chinese Consumers
Watch
60
61
2.1 One Screen Not Enough
for Chinese Consumers
62
Monetize Content
Nielsen Monetize Content Solution measures and
provides insights into media content across
multiple programs to help you better mon-
etize your content.
63
Chinas transition to digital TV is
moving rapidly and is changing
everything. Before, TV was broadcast
by a decentralized network of analog
stations; people watched TV. Today,
digital TV is coming about in the form
of a national network, with interactivity
that enables people to use their TVs,
not just look at them. In a very short
period of time, China is catching up with
and in some cases, already surpassing
the West.
Nielsen is keeping pace with the
changes with research performed on
behalf of Digital Television services,
content providers and advertisers to
gauge consumer usage of and attitudes
toward Digital Television and the value-
added services it offers. Additionally,
2010 marked the launch of our Three
Screen study on select households in
Shanghai to better understand how
Chinese consumers use TV, Internet and
mobile phone platforms.
Among households with TVs,
computers and mobile devices, TV
continues to be the dominant platform
with nearly 8 or 9 times more spent
watching TV at home than accessing
the internet (149 hours per month for
TV, more than 16 hours for internet).
Of those respondents who access the
Internet, many were surfing while
watching TV; nearly half (44%) engaged
2.1
One Screen Not Enough for Chinese
Consumers
in simultaneous viewing at some
point over the fourth quarter of 2010.
Simultaneous viewing levels were
slightly higher during the week than on
weekends. The top 5 websites accessed
during these simultaneous viewing
periods were: Baidu, QQ, Sina, Taobao
and 163.com. Other key findings
included:
The younger generation (ages 15-24)
are the heaviest mobile users.
Men and women report roughly the
same amount of total mobile usage time,
but women watch more video on their
mobile phones than men.
Most panelists check their mobiles
while watching TV.
The most common way to acquire
video files for mobile phones was via PC
transfer, followed by video streaming,
then direct download via the internet.
If respondents watched video on their
mobile phones, they were also much
more likely to access the internet on their
mobile phone to surf websites, transfer
files, and download software/wallpapers/
ringtones and/or games.
With the countrys emphasis on Next
Generation Broadcasting and the
integration for TV/Radio Broadcast,
Internet, and Telecommunication
networks in the next five years, Chinese
64
consumers have increasingly adopted
digital cable TV, IPTV, high speed
internet, and 3G cellular services.
Findings like these can help point
marketers in the right direction when
leveraging different types of digital
media platforms in order to reach their
target consumers most efficiently. The
need to better understand what and
how consumers watch becomes more
critical for media and marketers alike as
more content and services are available
via multiple platforms.
How Chinese are Using TV,
Online and Mobile Media
Watching CCTVs China Central
Television New Years Gala on television
on Chinese New Years (CNY) Eve has
historically been nearly every familys
traditional event to ring in the New
Year. But how families are viewing it has
changed according to a study by The
Nielsen Company. More and more often,
Chinese consumers are increasingly
creating their own converged networks.
According to Nielsens 2011 Chinese New
Year Gala Show cross-platform study,
while TV still played a major role in this
special occasion, viewers using other
Top 10 Websites for 2010 CNY Period Top 10 Websites for 2011 CNY Period
Rank TOP10 Chinese Sites UB (mil.)
1 baidu.com 184.76
p
(Avg weekly data, Feb 8-14, 2010 and Feb 15-21, 2010)
Rank TOP10 Chinese Sites UB (mil.)
1 baidu.com 218.56
p
(Avg weekly data, Jan 31-Feb 6, 2011)
2 qq.com 155.71
3 sina.com.cn 103.97
4 soso com 88 60
2 qq.com 179.75
3 sina.com.cn 113.36
4 sohu com 7915 4 soso.com 88.60
5 sohu.com 68.35
6 163.com 67.54
7 k 59 65
4 sohu.com 79.15
5 youku.com 73.88
6 soso.com 73.82
7 t d 66 63 7 youku.com 59.65
8 hao123.com 53.26
9 tudou.com 52.15
7 tudou.com 66.63
8 taobao.com 60.03
9 163.com 58.81
10 google.cn 51.35 10 hao123.com 54.44
Top 10 Websites During CNY Periods In 2010 And 2011
Remark: Mon-Sun for weekly data; 2-week average was calculated
since CNY Eve (Feb 13) and CNY Day for 2010 fell on Saturday and Sunday respectively
Source: Nielsen Online CR-NetRatings
65
media platforms increased significantly
compared to last years Gala show.
People watching video on websites grew
strongly: unique browsers (UB) for Youku
and Tudou increased 24 percent and 28
percent respectively from last years CNY
period.
Whats becoming clear is that many
Chinese consumers are not satisfied
with a TV-only experience. They want
to enrich their TV experience with
additional sources of information found
on the Internet and mobile devices.
According to Nielsens single-source
research, compared to last year, there
was a significant shift from TV to
Internet during prime time on the CNY
Eve for consumers living in Shanghai
(Chart below), while 11 percent of
Shanghai homes used the Internet
simultaneously while watching the Gala
show on TV.
During the CNY period in 2011, 42
percent of respondents in Beijing,
Shanghai, Guangzhou and Shenzhen
relied on online and 9 percent used
mobile screens to obtain additional
information about the CCTV Gala
Show.
15
9
12
6
3
0
1
9
:
3
0
:
0
0

-
1
9
:
4
5
:
0
0

-
2
0
:
0
0
:
0
0

-
2
0
:
1
5
:
0
0

-
2
0
:
3
0
:
0
0

-
2
0
:
4
5
:
0
0

-
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:
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9
CCTV 1 2011 Gala Show Internet 2011 CNY CCTV 1 2010 Gala Show Internet 2010 CNY
TV And Internet Usage During CNY Eve (2010 Vs 2011)
Source: Shanghai Cross-Platform Panel, Nielsen China
66
Opinions Count
Chinese consumers also took full
advantage of the much higher level of
interactivity offered by online platforms
using online forums and microblogs as a
way to connect with others and express
their sentiments regarding content and
performers in the CNY shows. From
an online perspective, the CCTV Gala
Show generated 39,322 messages from
netizens, more than any other of the
CNY shows broadcast by other major
provincial satellite TV channels.
The programs Missing Home and In
the Spring, which featured grass-root
performers; Xidan Subway Singing
Angel and the Xuri Yanggang group,
together with My Desk-mate, a skit
led by one of the countrys leading
comedians, Zhao Ben Shan, generated
the most buzz regarding performances
during the Gala show among Chinese
netizens.
Buzz volume for Top 10 discussed programs in CCTV Gala Show

Online Buzz Around CCTV Gala Show Performances

Source: Nielsen Online Buzz Metrics Jan 12,2011 Feb 11,2011
67
Challenges For Programmers
And Marketers
When it comes to programming
or advertisements, content is king.
Entertaining programs draw in viewers
and interesting advertising executions
attract their attention. Now, with an
increasing number of viewers dividing
their attention across two or more
screens, programmers and marketers
must think strategically about content
and advertising that resonate across not
just TV, but also the Internet and mobile.
When programmers and advertisers have
great content, they get the benefit of the
great echo chamber found on the Internet
and mobile, where people will talk about
and share that content over and over.
Consumer behavior is changing very
rapidly, and the role of each media type
must change too. Whether a media
type is used to drive consumers toward
a programmers own media or act as a
booster for the program, the key to
success is to identify the appropriate
screen that is most appealing and
convenient for the desired target audience
and understand how consumers interact
with it in this era of convergence.
Consumers are engaging more often in
real-time conversations, particularly
on social networks and other digital
platforms. Social media is a great way
to involve consumers, enabling richer
interactions and improved targeting so
marketers have a better understanding of
the things that engage them.
The changing role of traditional media and
the emergence of newer platforms extend
the programmer and marketers role well
beyond delivering audience. Programmers
and marketers today require a deeper
understanding of how consumers engage
with different types of media.
The Converged Chinese Audience during
the Spring Festival Study integrated
insights from a range of Nielsens services
available in China, including online buzz,
the cross-platform research panel in
Shanghai, as well as customized research
fielded in Beijing, Shanghai, Guangzhou
and Shenzhen during the CNY period.
68
Multinational Marketers Take a Back
Seat to Local Advertisers on CCTV Gala
Show
The CCTV Chinese New Year (CNY) Gala
Show and similar shows hosted by major
provincial satellite TV channels have
attracted many eyeballs and resulted
in strong interest and advertising
investment from brand owners and
marketers. According to the latest
findings from The Nielsen Company, local
and multinational marketers seemed
to have adopted a different advertising
strategy for the 2011 CNY.
In terms of advertising, the CCTV Gala
and other CNY shows appealed mostly
to local Chinese companies, with 94
percent of the total 930 advertising spots
aired before the programs and during
the commercial breaks occupied by local
brands. Only 6 percent of advertising
was bought by multinational brands.
The majority of multinational brands
chose popular provincial channels, such
as Beijing, Zhejiang and Jiangsu satellite
TV (see Chart 1). Local ads also led the
spending in online video platforms,
though with a higher proportion of ads
from multinational advertisers. For
instance, 61 percent of ads on Youku.
com were dedicated to local marketers
compared to 39 percent for multinational
brands (see Chart 2).
With Chinese local brands growing very
fast, they are eager to reach as many
people as they can to either establish or
strengthen their brand awareness and
image. The CCTV Gala show is one of the
most effective platforms to achieve this
goal.
Among the 80 TV commercials aired
during commercial breaks for the CCTV
Gala Show, all of them were local
brands. Surprisingly, not one of the top
three national advertisers for 2010,
Procter & Gamble, LOreal and Unilever,
placed any ads on the show in 2011. The
top advertising categories included
general appliances, finance, beverages,
Chinese wine and passenger cars, while
top spenders on provincial satellite TV
channels are more likely in the food,
beverage and toiletries categories.
Meanwhile, fast-moving consumer goods
(FMCG), automobiles and computer
& electronics were the most common
products advertised on Youku.
With Chinas increasingly fragmented
media landscape and shifting consumer
behavior towards online and portable
devices such as smartphones and table
PCs, programmers and marketers face
the challenge of creating more appealing
and targeted content and messaging for
their target audience.
69
Chart 1: Advertising Spending Across Major CCTV And Provincial
Satellite TV Channels
Remark: Spots are counted for commercial breaks before and during that specic CNY Gala, excluding program promotion and station
ID spots.
Chart 2: Advertising On Youku.com
Source: Nielsen Online AdR Plus, Feb 2-8, 2011
Multinational,
39.1%
Local, ,
60.9%
70
FMCG, 25.0%
Automotive, 17.2%
Computers & Electrical, 12.5%
Retail, 9.4%
Media, 9.4%
Health/Pharmaceuticals, 7.8%
Fashion, 6.3%
Entertainment, 6.3%
Communications, 4.7%
Travel & Accomodation, 1.6%
Source: Nielsen Online AdR Plus, Feb 2-8, 2011
Product Categories Of Advertisers For YOUKU
71
72
73
2.2 Digital Television
in China
74
Television Radio Mobile Newspaper Internet
Advertising Effectiveness
Nielsens Advertising Solution measures and provides insights into
the Effectiveness of Advertising, Product Placement and
Programming across multi platforms.
75
2.2
Digital Television in China
From the largest cities to the smallest
rural villages, TV is ubiquitous. No matter
their lot in life, people love to watch TV.
But the introduction of digital television
(DTV) has enabled consumers to do
more than watch TV; it enables them
to use it. It also offers broadcasters and
cable companies new revenue streams
not available from traditional over-the-
air broadcasting. The Nielsen CC Data
Company conducted a comprehensive
study to evaluate the potential impact of
DTV. The goal: determine how viewers
engage with and feel about cable DTVs
value-added services and advertising.
Hangzhou was the first city to launch
cable DTV holistic measurement and
has the most comprehensive and mature
cable DTV new business and advertising
research. The results of this research
revealed important insights:
Cable DTV viewers spent an
average of four hours per day watching
programming.
Viewers switched channels an average
of 43 times a day
1
.
Local channels (Hangzhou TV and
Zhejiang TV) enjoyed the highest
viewing share (36%), but CCTV channels
and provincial satellite TV channels
competed intensely (29% and 28% share,
respectively).
On the weekends, CCTV channels
gained a slight advantage over provincial
satellite channels.
News/current affairs, drama series
and entertainment programs lead in
night-time viewing, jointly capturing a 61
percent share.
DTV Value- Added Services
Video-on-demand (VOD) was by far
the most popular service, contributing
over 85 percent of time spend. Financial
services made up about 7 percent while
gaming services came in at 5 percent.
In other cities where Nielsen CC Data
monitors DTV, VOD can capture more
than 90 percent of all value-added
services.
Consumers who access DTV via Internet
protocol rather than the traditional cable
are active VOD users and also consume
more non-VOD services than basic
users, particularly gaming and especially
on holidays. Correlations were found
between different types of programming
and VOD. For example, consumers who
viewed drama series also tended to
be heavy movie viewers. Interestingly,
those who used the financial value-
added services tended to have a very low
1
Based on the viewing records of users who stayed on a channel for at least 5 seconds after every channel change
76
correlation with other programming.
Nielsen CC Data divided users into seven
clusters and their share of the VOD habit:
Paid users (6.37%)
Potential paid content users (7.39%)
Free VOD associated with advertising (11.69%)
Potential free VOD/advertising (12.87%)
Free movie-on-demand users (5.63%)
Potentially free movie-on-demand (6.31%)
Fringe users (49.74%)
Fringe users those with very low
transaction volume and uncertain VOD
preferences made up half of total
users.
Advanced DTV Advertising
Depending on the cable DTV platform,
three different advertising formats are
being developed:
Compulsory portal ads (15-30
second video ads): 15-second ads
attained an average total daily
frequency of 230,000 times, while
30-second ads were exposed to users
an average of 450,000 times a day.
VOD pre-roll ads: Daily VOD content
with advertisements was requested
more than 90,000 times. Due to the
compulsory nature of these ads, pre-
rolls became the most acceptable new
advertising format.
Navigation banner ads: These ads
have high exposure and high coverage,
with the average total daily frequency
reaching 14 million times; a single
channel group (10 channels) captured
an average total daily exposure of 2.2
million times.
Overall premium DTV users in
Hangzhou paid more attention to portal
ads (37.1%) compared to basic users
(24.4%).
Looking Forward:
DTV operators will increase
their average revenue per user by
building up the VOD usage habit of
the potential and fringe users.
DTV advertising has gained
more and more attention as a new
advertising form from both DTV
operators and adverting agencies.
77
78
79
2.3 We Live Online:
Internet and Social Media
Trends in China
80
Social Media Intelligence
Nielsens Social Media Intelligence Solution harnesses
the full potential of Social Media, to drive superior
business performanceacross your business.
81
Life for people around the world is
increasingly lived online. Whether
staying in touch with friends on social
networking sites, researching the
price of a new camera, checking email
on a mobile phone or watching the
latest video, Chinese are accessing the
Internet more and more. While the
country boasts more than 457 million
Internet users, that number represents
just 34.3 percent of the population.
About 900 million people have yet to
surf the web and tremendous growth
2.3
We Live Online: Internet and Social Media
Trends in China
opportunities continue to exist for
online companies. About two-thirds
of Chinese have been online for three
years or less.
Who is going online and what are they
doing? The average Chinese Internet
user is online almost 20 hours per week
and the age profile is getting older: 41
percent of users are aged 30 or over.
They are accessing the Internet from
computers and, increasingly, their
smartphones (or both!). And they tend
live in urban areas: about half of city
Chinas Internet Users Can Be Divided Into Three Groups
Source: 26th CNNIC China Internet Study Report
1 square = 10 million People
Non-users: 901M
Mobile Internet: 49M
Fixed and Mobile Internet: 228M
Fixed Internet 143M
82
dwellers use the Internet, but just one
in seven rural residents do the same.
Once online, Chinese are reading the
news or conducting searches, playing
games or communicating. Increasingly,
though, they are buying products,
trading stocks or booking travel.
Overall, there are three major online
consumption trends in China that
marketers need to understand:
1. Digital consumers are attracted
more to genuine issues and people
than to celebrities The most buzz in
China is not about superstars, but about
regular people such as: Yao Chen,
Chinas most popular microblogger
with seven million fans, Li Yuchun,
the nationwide singing contest winner
who created a debate about the
modern Chinese woman, and Xi Li Ge,
a homeless man with a sharp fashion
sense, dubbed the prince of beggars.
2. Virtual currency and goods are
a key part of the online experience
Many of Chinas Internet users like
decorating virtual rooms versus an
actual one. And dont think that doesnt
matter from a business perspective:
almost 80 percent of the revenue of
Tencent, Chinas largest and most-used
Internet portal, comes from Internet
Value Added Services, with less than
seven percent coming from advertising.
82.5
63.2
70.5
72.4
76.3
56.5
78.5
55.1
50.1
31.5
33.8
30.5
15.0
8.6
0
20
40
60
80
100
O
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e

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[Unit: %]
Digital Entertainment
Traditional Internet Applications
Internet Media
E-Business
Information Consumption And Communication Mature,
Product Consumption Just Starting
83
3. Online shopping and group
buying are big and getting bigger
E-commerce in China is worth $39
billion, the worlds second-largest
market after the U.S. And it is only
going to get larger. With only one-third
of Chinese Internet users shopping
online, huge opportunities remain for
the sector to grow. Even those who have
yet to shop online use the Internet to
research purchasing decisions.
Marketers interaction with consumers
should be authentic, allowing
consumers to tell their story via
microblogs and other social media.
Additionally, virtual goods and
currency can be an important element
of an online marketing plan. And
understanding e-commerce and an
online sales strategy is critical.
1. Web Site Ranks/Trends
With microblogs and other innovative
products, local giants are winning in
China. QQ, the portal from Tencent,
continues to be the most popular
portal web site, while Sina and 163
round out the top three. The overall
website rankings do not change much
from month-to-month since the top
sites innovate frequently and fiercely
compete with each other. While Google
1 qq.com http://www.qq.com
2 sina.com.cn http://www.sina.com.cn
3 163.com http://www.163.com
4 sohu.com http://www.sohu.com
5 ifeng.com http://www.ifeng.com
6 xinhuanet.com http://www.xinhuanet.com
7 yahoo.com http://www.yahoo.com
8 people.com.cn http://www.people.com.cn
9 cctv.com http://www.cctv.com
10 china.com http://www.china.com
Portals
Source: Nielsen
84
1 taobao.com http://www.taobao.com
2 alibaba.com http://www.alibaba.com
3 paipai.com http://www.paipai.com
4 alipay.com http://www.alipay.com
5 dangdang.com http://www.dangdang.com
6 alisoft.com http://www.alisoft.com
7 amazon.cn http://www.amazon.cn
8 store.qq.com http://store.qq.com
9 hc360.com http://www.hc360.com
10 vancl.com http://www.vancl.com
1 baidu.com http://www.baidu.com
2 soso.com http://www.soso.com
3 hao123.com http://www.hao123.com
4 sogou.com http://www.sogou.com
5 google.com.hk http://www.google.com.hk
6 google.cn http://www.google.cn
7 iask.sina.com.cn http://iask.sina.com.cn
8 gougou.com http://www.gougou.com
9 58.com http://www.58.com
10 soku.com http://www.soku.com
Search
E-commerce
Source: Nielsen
Source: Nielsen
85
may be the top search engine in the
English-speaking world, Baidu holds a
significant lead in China. Meanwhile,
the e-commerce web site giants, such
as Taobao and Dangdang maintained
solid performance in 2010, while a few
new e-commerce platforms like VANCL
developed rapidly.
2. Online Ad Trends in China
While TV continues to be the media
of choice for advertisers, the Internet
continues to grow as an advertising
channel. In a clear sign that marketers
are realizing the benefits of advertising
online, the channel has now surpassed
traditional magazines in terms of
spending. The estimated value of online
advertising in 2010 is about RMB 21.1
billion. It maintained its recent pattern
of growth and kept pace with overall
economic growth trends.
Much of the growth in online
advertising can be linked to a number
of big events that occurred during the
year. The Shanghai Expo, the World Cup
in South Africa, and the Guangzhou
Asia Games all drew huge numbers
of Internet users to watch the action
online, and advertisers pounced on the
chance to reach them.
A Review of Online Ads By Industry
In terms of market share of online ads,
the retail industry posted the highest
growth rate and took the top spot,
with ad spending estimated at RMB4.2
billion and a 19.9 percent market share.
The Auto and CE industries rounded out
the top three, with 19.5 percent and 9.7
percent market shares, respectively.
Strong Sales Boost the Auto
Industrys Online Spending
Chinas auto market achieved solid
performance in 2010, with a world
record for production output of 18
million vehicles. Nielsen forecasts that
in the next few years, Chinas auto
sales will keep growing faster than all
other global markets, with much of
this growth coming from consumers in
lower tier cities.
Traditional media (TV, Newspapers
and Magazines) continue to be the
most popular channels for automotive
advertising, totaling approximately
RMB 32.5 billion. Estimated online
display ad value came in at about RMB
4.12 billion, suggesting room for ample
growth as car makers recognize that
consumers are increasingly researching
car purchase decisions online.
How are auto companies advertising
86
/
D
E
ds
82.9
12.9
2.2
2.1
2009Q1
79.8
15.1
2.1
3.0
2009Q2
78.1
16.9
2.0
2.9
2009Q3
79.7
14.9
2.4
3.0
2009Q4
82.4
12.7
2.1
2.8
2010Q1
/
D
E
ds
79.5
15.1
2.2
3.1
2010Q2
78.9
16.0
2.1
3.1
2010Q3
80.6
13.6
2.4
3.4
2010Q4
[%]
2009-2010 Online Media Market Share Trend
Source: Nielsen
76.6
58.7
38.2
7.5
12.5
11.3
19.5
14.5
-14.8
-9.8
17.6
30.4
-20
0
20
40
60
80
100
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2010 estimated Ad vaIue(000) 2009 estimated Ad vaIue(000) Compared with 2009(%)
2010 China Estimated Online Display Ad Value
Source:Nielsen
87
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Jan Feb Mar Apr May Jun JuI Aug Sep Oct Nov Dec
2007 2008 2009 2010
[000]
2010 China Estimated Online Display Ad Value Trend
Source: Nielsen
0
900,000
1,800,000
2,700,000
3,600,000
4,500,000
-10
-5
0
5
10
15
20
25
2010Estimated ad value (000) 2010 industry share %
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2009industry share %
2010 Estimated Online Displayed Ad Industry Share

Source: Nielsen
88
166
121
174
156
144
141
124
132
156
154
170
167
0
40
80
120
160
200
06 08 09 10 05 07
2005-2010 China Auto Sales Monthly Trend
Source: China Association of Automobile Manufacturers
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
0
700,000
1,400,000
2,100,000
2,800,000
3,500,000
4,200,000
Estimated traditional display ad value(TV/Newspaper/magazine)
Estimated online display ad value
[000]
2010 Auto Industry Ad Contrastive Analysis
Source: Nielsen
89
Auto onIine Ad
Car makers saIes services
dispIayed ads Video ads dispIayed ads Video ads
Jan 60 23 119
Feb 55 19 91
Mar 61 21 111
Apr 66 30 115 1
May 63 30 126 1
Jun 58 30 117 2
Jul 61 26 113 2
Aug 68 24 124 1
Sep 69 30 153 1
Oct 68 32 130 1
Nov 66 37 155 1
Dec 63 31 178 1
Source: Nielsen
0
20
40
60
80
0
300
600
900
Advertisers of displayed ads Advertisers of video ads
Displayed ads campaigns Video ads campaigns
2010 Auto Makers Online Ad Analysis
2010 Car Makers & Sales Services Online Ad Analysis
Source: Nielsen
90
online? First, car makers owned about
95 percent of all online ad spending for
the overall industry, while sales services
owned about five percent.
When it comes to the ad type,
displayed ads were the most popular
form, although several auto brands
budgeted some of their funds toward
online video, such as pre-program ads,
program pause ads and seeding ads.
The Rising Chinese Car Brands
In 2010, the sales volume of Chinese
automotive brands hit 2.93 million
a 34 percent rise over 2009 and
increased its market share from 29.4
percent to 30.7 percent. One factor
that may have played a role in this
solid growth is attention to online
advertising: there are more such ads
from Chinese manufacturers than from
joint venture and imported brands. But
when it comes to overall advertising
spending (online and traditional), joint
ventures still hold the lead.
Computer And Consumer Electronics
The estimated value of computer and
consumer electronic product online
display advertising came in at about
RMB 2.15 billion, or 10.2 percent of total
online ad spending.
Top 10 Computer/Consumer
Electronics Advertisers
When it comes to online video ads,
projectors, laptops and handheld
electronic products dominate. But
when it comes to online display ads,
handheld electronics brands outnumber
all others.
Fast-Moving Consumer Goods (FMCG)
In 2010, FMCG online display ad
spending grew an estimated 17.8
percent year-to-year to RMB 1.8 billion.
Food and beverages accounted for 46
percent of all FMCG online display ads,
followed by skincare and personal-care
supplies with 26.4 percent share.
FMCG Online Video Advertising
Analysis
In 2010, there were 1,039 online
video ad campaigns from 144 FMCG
advertisers. The top three categories
were skincare, food and beverages.
3. Social Media
Throughout the world, social
networking sites (SNS) have exploded
as people see them as an easy and
convenient way to stay in touch with
friends and family, share news and offer
their opinions on everything from pop
stars to sports to what they are buying.
In China, SNS saw a 19.5 percent user
growth rate from 2009 to 2010, one of
two online categories that expanded
during that period.
One particularly popular form of SNS
91
34
28
12
0
10
20
30
40
50
0
700,000
1,400,000
2,100,000
2,800,000
Chinese car
brands
joint venture
brands
imported
brands
Estimated ad value(000)
DispIayed ads Video ads
Brand Campaigns Brand Campaigns
Chinese Car
Brands
34 1510 17 121
joint venture
brads
28 3258 24 426
imported
brands
12 363 6 28
0
100
200
300
0
70,000
140,000
210,000
280,000
350,000 estimated ad value(000) compared with 2009(%)
Source: Nielsen
Source: Nielsen
2010 Online Displayed Advertisers Analysis
2010 Top 10 Auto Advertisers
92
-30
0
30
60
90
120
150
0
60,000
120,000
180,000
240,000
300,000
2010 estimated ad value(000) 2009 estimated ad value(000) compared with 2009(%)
0
300,000
600,000
900,000
08 09 10
Computers/hardware
& software
Digital cameras /handheld
electronic products
Corporate branding
office appliance
Household
appliances
Estimated dispIayed ad vaIue(000) Estimated ad vaIue[000]
Source : Nielsen
Note: the percentage in the chart is the number compared with the previous year
Source: Nielsen
2010 Computer & Electronics Estimated Ad Value
2010 Computer & Electronic Products Online Displayed Ad Analysis
93
in China is Microblogs. They offer users
the chance to disclose information
(such as negative reviews of products
or services used), share ideas and
show pictures and videos, using simple
text. They are also used to find friends
and follow celebrities. BBS is the
most popular social behavior, with
over 80 percent of all social media
content. Games are also a traffic
driver, especially for those people just
starting to use SNS. Local players are
dominating the market, with companies
such as QQ Game dominating the
scene. But despite the popularity of
these sites, the market remains under-
monetized.
0
70,000
140,000
210,000
280,000
LENOVO INTEL SAMSUNG MIDEA SONY G-NET DELL CANON HAIER TCL
2010 estimated ad value(000) 2009 estimated ad value(000)
Source: Nielsen
Top 10 Computer/Consumer Electronics Advertisers
The Value of SNS for Advertisers
Obviously, such a massive platform
offers advertisers a huge opportunity
to reach consumers and engage in a
dialogue. Microblogs, in particular,
can be useful to brands, regardless
of industry, as they provide a way
to measure buzz both positive and
negative and gauge how consumers
feel about their products.
The typical SNS netizen has a large
number of fans and friends, and if one
person receives information from a
friend, that information is more likely
viewed as credible. Companies can
also use SNS to their advantage by
94
Source: Nielsen
2010 FMCG Estimated Ad Value
63
177
78
28
29
36 35
48
-43
-37
1 5
-50
0
50
100
150
200
0
50,000
100,000
150,000
200,000
250,000
compared with 2009(%)
Source: Nielsen
2010 Top 10 FMCG Advertisers
0
40,000
80,000
120,000
160,000
95
31
19
6
-8
2
53
116
361
-50
50
150
250
350
0
70,000
140,000
210,000
280,000
350,000
420,000
2010 estimated ad value(000) compared with 2009(%)
2010 FMCG Online Displayed Ad Category Analysis
0
40
80
120
160
Displayed advertisers Video advertisers
Source: Nielsen
Source: Nielsen
2010 FMCG Displayed Advertisers And Video Advertisers
96
0
300
600
900
displayed ad campaigns video ad campaigns
Source: Nielsen
2010 FMCG Displayed Ad And Video Ad Campaigns
Top 10 Lists By Type of Online Ad In 2010 Display Ads
Advertisers 2010 Est. ad vaIue (000) 2009 Est. ad vaIue (000) Compared with 2009(%)
VANCL 964,400 518,864 86
DEERWAY 423,576 90,208 370
361 352,768 238,416 48
MECOXLANE 352,744 184,296 91
TOYOTA 338,880 161,248 110
MOONBASA 321,136 98,160 227
LENOVO 269,880 207,040 30
LINING 263,944 372,848 -29
HYUNDAI AUTO 259,232 171,888 51
GREAT WALL AUTO 251,624 66,136 280
Source: Nielsen
97
Industry Categories Of The Top Advertisers
Online Video
Video advertisers Video ad campaigns Video ad creative
ALIBABA 148
14483
CHINA MOBILE 124
14226
PERFECT WORLD 114
1975
SAMSUNG 95
5206
P&G 90
29087
TINGHSIN 85
13196
VW 78
4166
LOREAL 71
9381
CHINA TELECOM 66
13005
UNILEVER 63
31145
Auto
25%
E-commerce
15%
Computer & electronic
14%
FMCG
12%
Sport&fashion
9%
Bank
7%
Communication 3%
Online media 3%
Medical&Health
Recruitment
Games
Others 5%
3%
2%
2%
Others
18%
Data Source: Nielsen
Data Source: Nielsen
98
establishing a brand presence on SNS
sites (such as SINA weibo) is a way to
connect with fans of your brand.
A SNS brand presences has become
an important platform to manage
customer relationships as they enable
brands to quickly send out updates
about new products and services
directly to people they know are
interested in the brand and enable
fans to provide feedback. Some of the
ways companies can use such accounts
include:
Social Media User Growth Rate In China
Users/ fans can get all kinds of
information, such as news of product
launches and promotions, which they
can then share with their fans and
friends.
Hosting online campaigns that
complement off-line events, with
picture/word/video messages.
Offering after-sale services and tech
support.
2009.06 - 2010.06 (User Growth Rate)
Shopping Video Gaming SNS
IM BBS Blog
Music
45.9%
0.0%
21.9% 21.8%
13.9%
12.3%
11.0%
8.1%
31.4%
19.5%
11.9%
13.1%
11.7%
8%
10.4%
4.5%
2009.06-2009.12
2009.12-2010.06
99
Skincare
Rank Brand Buzz VOL
1 Elizabeth Arden 727550
2 Chanel 657825
3 Dior 601475
4 Lancme 459802
5 Estee Lauder 324223
6 Aupres 317993
7 La Mer 228909
8 Olay 168190
9 H
2
O 168122
10 Clinique 159015
Soft Drinks
1 Coca-Cola 50065
2 Sprite 18542
3 Pepsi 11623
4 WHH Nutri-Express 8809
5 Minute Maid Juice 3749
6 Fanta 3274
7 President Tea 3078
8 KSF Tea 2608
9 President Juice 2396
10 Mengniu Suan Suan Ru 1992
Top 10 Brands By Industry
Source: Nielsen
Source: Nielsen
100
Banks
1 Bank of China 156355
2 Industrial and Commercial Bank of China 142482
3 China Construction Bank 105090
4 China Merchants Bank 101500
5 Agricultural Bank of China 96674
6 China Minsheng Bank 67861
7 Bank of Communications 60585
8 Industrial Bank 47366
9 HSBC Bank 44923
10 China Everbright Bank 41937
Source:Nielsen
101
Trend Summaries
Applications
Smartphones and other media-friendly
portable devices are leading society
into a new era. Location is becoming
important information to be leveraged
for marketing initiatives.
Social Gaming (Gamification) :
In the coming years, more and more
brands will try to deepen brand
integrations with existing gaming
platforms or SNS, with an increasing
number creating their own gaming
structures to attract consumers by
offering preferred status, coupons or
freebies.
Socialized E-Commerce:
The connection of social media and
e-commerce is fueling the investment
into both, as its not only a new and
growing channel, but also a cost-
effective one to delivery brand value and
messages directly to consumers.
Five Tips on How Marketers Can
Effectively Use SNS
Face and communicate with
consumers in simple ways, such
as building official microblogs to
interact and engage with consumers
constantly and consistently.
Offer simple and creative tools to
satisfy consumers creative thirst.
When sponsoring social events,
brands can stimulate consumers
participation enthusiasm by
leveraging their social responsibility
by hosting v-movie or v-novel
contests, to promote and deliver
brand/product messages.
Based on consumers tendencies to
associate with groups, take advantage
of SNS and Groupon-similar sites to
cultivate brand fans effectively, such
as selling a new product on site, and
getting consumers feedback on social
commerce or product innovation.
Also, building a branded page on SNS
can be an effective way to expand
social CRM.
Make full use of mobile applications
to involve more consumers in the
brand marketing circle and provide
them with opportunities to win LBS
badges or other types of incentives.
102
4. Online Insights
Video
In 2010, the online video industry
continued to gain speed. Online video
beats TV when measured by user
averages by week. Its not surprising
then that advertisers pay more
attention to online video ad to attract
netizens, who tend to be the customers
they are targeting. For current online
video websites to maintain this
advantage, they should focus on
the quality of video content, users
experience, fluency and clarity of the
video to enhance users loyalty.
E-Commerce
E-commerce (EC) posted significant
and rapid growth in 2010, with the
advantages of the traditional EC
portal becoming more obvious to
consumers. Fast-moving consumer
goods remain the primary focus of
EC, and Internet consumers typically
made their purchases on the big name
websites. The competition landscape
became clearer, with Taobao having
the dominant position and running way
ahead of the competition. In terms of
B2C, traditional big websites still hold
most of the market share. However,
vertical B2C platforms like Vancl or
Source: CNNIC 20-26th Internet Development Statistics
China Online Video User Development Trend
99
161
180
202
222
240
265
62.6%
11.8%
12.2%
9.9%
8.1%
10.4%
0
50
100
150
200
250
300
350
400
450
500
Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10
-70%
-50%
-30%
-10%
10%
30%
50%
70%
Online video user Growth rate of online video user growth rate of netizen
Unit: Million
G
103
Source: CNNIC 20-26th Internet Development Statistics
23.0%
7.1%
9.1%
10.9%
12.4%
17.0%
20.5%
12.4%
4.3%
6.3%
9.4%
12.9%
17.7%
37.1%
0% 10% 20% 30% 40%
above 42 hours
35-42 hours
28-35hours
21-28hours
14-21hours
7-14hours
below 7 hours
online video media
TV
360buy continue to leverage their
respective strengths and are gradually
increasing their industry positions.
China Online Video User Development Trend
Looking Forward:
Online video will continue
to take off and advertisers will
recognize the huge potential of
this medium.
Spending on mobile advertising
will remain small until widespread
use of 3G makes for a better
consumer experience.
With the introduction of better
measurement standards, expect
online ad spending to grow
dramatically.
104
Platform Category
Note: Top 15 category by online shopper amount
Base :consumers have online shopping experience in Jun 2010
88.8%
24.2%
C2C
B2C
53.2%
21.9%
20.0%
19.5%
18.9%
13.2%
9.5%
9.0%
4.4%
3.5%
3.2%
3.2%
3.0%
2.9%
1.9%
Apparel & Accessories
Health/Wellness/Beauty
Shoes & Athletic Footwear
Home & Garden
Books
Consumer Electronics
Paid Content Accessed Online
Food & Beverage
porting Goods & Outdoor Activities
Child/Baby Care
Toys, Games & Hobbies
Computer Software
Computer Hardware
Office Supplies
Jewelry & Watches
Base: Consumers with online shopping experience in Jun 2010
Note: Top 15 Categories by online shopper amount
Sporting Goods & Outdoor Activities
Source: Nielsen Online E-Commerce Panel, Jun. 2010
Source: Nielsen Online E-Commerce Panel, Jun. 2010
Online Shopping Consumption Amount
Online Shopper Amount
Platform
11.8%
9.5%
7.3%
5.5%
4.2%
4.0%
3.5%
24.9%
18.7%
10.7%
Apparel & Accessories
Health/Wellness/Beauty
Consumer Electronics
Home & Garden
Child/Baby Care
Computer Hardware
Shoes & Athletic Footwear
Club Memberships
Book
Air Reservations
Category
Base :Online shopping consumption amount in Jun 2010 Note: The top 10 categories accounted 89.2% for the overall
75.3%
24.7%
C2C
B2C
105
106
107
2.4 On the Go:
Chinese Mobile Trends
in 2010
108
109
2.4
On the Go: Chinese Mobile Trends
in 2010
With an estimated 853 million subscribers,
Chinas mobile market is the worlds
largest and it will continue to grow as
the population becomes more affluent. In
contrast, the U.S. mobile market has 302
million subscribers, covering 96 percent of
the population
1
. It is a saturated market,
and any growth will likely be quite modest.
Apart from sending text messages and
making the occasional voice call, what are
Chinese using their phones for? Chinese
consumers use their devices for gaming,
sending email, watching video and
increasingly, connecting to the Internet.
At the end of 2010, China had 457 million
Internet users and 303 million mobile
Internet users. The latter number increased
69.3 million within just one year. What is
driving this high level of mobile Internet
growth and penetration in China?
Compared to developed countries, Chinas
Internet market is unique: the number of
users of the mobile Internet continues
to grow faster than the rate of overall
Chart1. Internet And Mobile Data Users In China
123
137
162
210
253
298
338
384
420
457
13
17
44
50
73
118
155
233
277
303
11% 12%
27%
24%
29%
40%
46%
61%
66% 66%
CH1:06 CH2:06 CH1:07 CH2:07 CH1:08 CH2:08 CH1:09 CH2:09 CH1:10 CH2:10
480
380
280
180
80
-20
80%
60%
40%
20%
0% I
n
t
e
r
n
e
t
/
M
o
b
i
l
e

D
a
t
a

U
s
e
r
s

(
M
M
)
Internet Users in China
Mobile Internet Users
M
o
b
i
l
e

D
a
t
a

U
s
e
r
s

a
s

%

o
f

I
n
t
e
r
n
e
t

U
s
e
r
s
1
CTIA, The Wireless Association, December 2010
Source: CNNIC Internet Report, 2006- 2010
110
Internet usage (chart 1). Almost two-thirds
of Chinese using the Internet are doing
so on mobile phones, despite lower 3G
network and smartphone penetration.
Already Chinese mobile Internet usage has
surpassed that in the U.S. According to
Nielsen survey data from 2010, 38 percent
of Chinese mobile users access the Internet
compared to 27 percent of Americans.
Based on Nielsen research there are four
main factors driving high mobile Internet
penetration in China.
Mobile Outpaces Wired Internet
The mobile Internet has become an
important extension to the traditional
broadband- connected Internet. Chinas
fixed-line broadband was developed
later than that in the U.S. At the same
time, Chinas mobile user market is very
large and developing rapidly, providing
ample opportunities for Chinas mobile
Internet market to surge. According to
the CNNIC Internet Report, Chinas
average fixed Internet access speed
is only 100.9KB/s, far behind the
world average speed of 230.3KB/s.
The lack of computer knowledge and
skills, combined with a low computer
penetration rate, has also contributed
to the lag of fixed-line broadband
development.
Consider the facts: In Western Europe,
there are approximately 70 personal
computers for every 100 people, compared
to less than 20 for every 100 people in Asia
and the Pacific region
2
. In contrast to low
personal computer ownership, China is the
largest mobile phone user market in the
world, with statistics from Chinas ministry
of industry and information showing that
there are 863 million mobile users in
China by February 2011 greater than the
total number of global mobile users just a
decade ago. Mobile penetration in Chinas
more developed cities is nearing saturation.
A large-scale market survey of Guangdong
province conducted jointly by China
Telecom Guangzhou Research Institute
and Nielsen showed that fewer than half
(47%) of households have computers
while 87 percent of people (age 15-65)
have mobile phones. The rise of 3G and
smartphones that enable consumers to
easily and quickly use the Internet on their
cell phones will continue to drive growth in
the mobile Internet market.
Varied Pricing Plans Boost Mobile
Internet Usage
Another important factor affecting the
growth of mobile Internet is data fees.
Subscribers can choose from a range of
data plans to browse the mobile Internet.
China Mobile, for example, was the first
to launch a low price plan which allowed
customers to use a limited data package
for only 5RMB (less than US$ 1) a month.
Under the plan, users can enjoy their
mobile Internet or chat through mobile
2
The Economist, Dec 30, 2009
111
Table1. The Mobile Internet Price Plan Of China-telecom
Chart 3: 3G Users In China By Age
Mobile Internet users
0.76 USD 30M
Up to 1000RMB
1.52 USD 60M
3.05 USD 150M
4.57 USD 300M
7.61 USD 800M
15.23 USD 2G
Overage fee 0.000046 USD /KB
Data included
0%
10%
20%
30%
40%
50%
60%
70%
age 40-49 age 30-39 age 20-29 age 10-19
Source: China Telecom Website
Source: The Nielsen Company and CNNIC in Aug. 2009
112
QQ (a type of IM service) anytime they
like. In order to boost their share of the 3G
market, China Telecom and China Unicom
each released low-cost data plans with
rates of USD 0.0076 per minute, or USD
0.0015 per KB. China Telecom launched
the 5RMB (0.76 USD) package, which
included 30 Mb of data (Table 1), with
0.000046 USD/K for excessive usage,
which has proven to be very popular with
consumers.
The low costs and convenience of mobile
phones has met the communication needs
and economic conditions of the younger
generation, especially students. Almost
60 percent of Chinas 3G users are young
people age 20-29.
In short, behaviors started on the
traditional Internet are slowly shifting to
the mobile Internet. The development
of mobile apps and the low cost of data
usage have been instrumental in driving
growth in this sector.
EIS Drives Growth
Another factor behind the surge
of Chinas mobile Internet market
is the development of Enterprise
Information Services (EIS) with Chinese
characteristics. Like many of their
global counterparts, Chinese mobile
network operators experiencing slower
subscriber growth rates, declining
ARPU and high churn rates have begun
exploring new areas to expand the
business and maintain sustainable
growth. Industry-focused applications
have been an important component
of their growth strategy. In fact, the
mobile phone is not simply a tool
for personal communication and
entertainment, but also a business
tool for information sharing and
administrative functions.
Telecom operators in China have
provided EIS solutions for various
industry segments. Below are some EIS
cases in three typical industries with
Chinese characteristics.
China has a huge number of civil
servants: according to the National
Bureau of Statistics, there are more
than 13 million civil servants, equating
to one civil servant for every 100
people. The Chinese government
organization is complex, consisting
of national ministries, provincial
governments, and municipal
governments in cities, counties,
towns and villages. Each has different
information needs such as state
administration and law enforcement
(government to the public), information
exchange between departments
(parallel) and information transfer
(superior to subordinate). As a result,
targeted EIS is booming for different
section needs. For example, China
Telecom has provided e-Commerce
for the Industry & Commerce
Bureau, e-Police for Ministry of Public
Security, Safe City, Digital Municipal
Administration, mobile e-government
and a total of 18 EIS services for
113
the government and administrative
bureaus.
Chinas One Family, One Child policy
means that most families have only one
child with six adults (four grandparents
and two parents) taking care of him or
her. Chinese parents place a great deal
of importance on education as a result
of Confucianisms influence. They want
their children to win at the starting line,
care about their learning progress and
are willing to invest for their childrens
future education. According to the
Nielsen Online Consumer Confidence
Survey 2010, childrens education
ranked in the top three three concerns
for Chinese. Almost half (45%) of
consumers will use spare cash for
education of their child, second only to
putting it into savings. To capitalize on
the importance on education, Chinese
mobile operators have launched a
number of products such as educational
IM, MMS & SMS for teachers, parents,
and students, which meet the needs of
home-school communication.
Local Chinese Internet companies
have seen tremendous growth in
a relatively short amount of time.
Benefiting from the rapid development
of the Internet, online shopping has
become more and more popular, with
161 million consumers as of the end of
2010. Logistics enterprises, especially
Chart 4: How Long Have You Owned Your Current Mobile Device?
More than 3 years
2 years ~ 3 years
1 years ~ 2 years
6 months ~ 1year
Less than 6 months
5%
13%
13%
31%
38%
114
private express delivery couriers, are
experiencing rapid growth as a result
of this trend: According to the China
Post Bureau website, Chinas express
delivery service totaled 2.34 billion
deliveries with 25.9 percent year-on-
year growth; business revenue totaled
57.46 billion Yuan with 20 percent
year-on-year growth. A number of EIS
products have emerged to meet the
mobile location tracking and logistics
management demands of this sector.
Technology Advances Rapidly
Last but not least, technology advances
have allowed the mobile device to offer
more capabilities and connectivity. As the
closest and most personal device for users,
mobile phones have played a pivotal role
in the development of operator services as
well as the mobile Internet.
With the increasing emphasis on mobile
devices, Chinese mobile users attach great
importance to powerful functions, a cool
appearance and a stylish design and are
interested in trying new handsets. These
factors have led China to have one of the
highest mobile replacement rates in the
world. According to a survey by China
Telecom Guangzhou Research Institute
in August 2010, more than two-thirds of
respondents have their current mobile
phone for less than two years.
Mobile devices features are increasingly
important in consumers device selection.
Statistics from China Telecom Guangzhou
Research Institute and Nielsen China have
shown that in the 3G era, appearance
and function have become the principal
elements consumers consider when
selecting a mobile device even more
important than price. (Chart 5)
In terms of those functions, mobile
Internet and 3G capabilities are
important factors for Chinese
consumers, as are the availability of
mobile applications. (Chart 6)
Moreover, the intense competition in the
handset market has compelled device
manufacturers to reduce costs and keep
innovating to meet the changing needs of
consumers. It also helps lower the threshold
for mobile Internet applications, working as a
strong impetus to the development of mobile
Internet. Mobile Internet applications have
become an integral part of peoples daily
lives, both at home and work.
For example, Chinese use more instant
messaging (IM) than Americans, with
almost one-quarter (23%) of Chinese using
the service compared to just 18 percent
of Americans. The prevalence of IM has
propelled the development of Chinas mobile
Internet to a great extent. QQ (a type of
IM service) has been a popular IM brand on
computers since the 1990s and is now the
most popular Internet communication tool
in the world with over 647.6 million active
accounts
3
.
3
Tencent Holdings Limited Annual Report 2010
115
Chart 5: Factors Considered In Purchasing Mobile Phone
Chart 6: Types Of Functions Important To Consumers
78%
70%
62%
44%
30%
6%
1%
Appearance
Function
Price
Brand
Use
Get from friends or company
Other
Intelligent Operating System
Super Screen
Camera
3G
MP3
GPS
WIFI
Software
Dual-mode
Phone reading
Security
Email
Radio
62%
55%
49%
44%
42%
35%
34%
29%
28%
28%
27%
26%
26%
116
Social networking is also developing
rapidly in China. Renren web and
Kaixin web are the most famous social
networks in China, and are as popular
as Facebook is in the United States.
Chinese youth are flocking to these
sites to stay in touch with friends,
express their opinions online and build
their own virtual world. While they
may set up accounts on PCs, they are
also accessing them on their mobile
phones, with the proportion of social
networking site visits via mobile devices
reaching 13 percent
4
.
In addition, knockoff cell phones
which mimic mainstream brands with
very low price points and improvements
in appearance and functions have
become a hit and are a strong force
which cannot be ignored in the Chinese
mobile phone market. The counterfeit
cell phone is not just a product, but
a unique business segment in China.
The counterfeit cell phone sector has
also undergone a transformation,
from producing phones that copy
(and infringe) the designs of the
larger manufacturers, to producing
phones that look nice, have powerful
features as well as a low price. These
devices will also play an increasingly
important role in the continued growth
of mobile Internet in China as they
make it available to people who might
otherwise not have been able to afford
mobile Internet service.
4
source: China Telecom Guangzhou Research Institute Survey in Aug. 2010
Mobile Media Usage In The Past 30 Days Q1, 2010
Text messaging/SMS
Picture messinging/MMS
Mobile internet
Email
Pre-installed games
Text alerts
Ringtone downloads
Application (App) downloads
Picture downloads
Instant messaging
Location-based Services
64%
37%
22%
27%
38%
25%
8%
21%
40%
19%
16%
27%
18%
20%
17%
13%
16%
23%
14%
4%
86%
U.S.
China
117
China is a diverse and rapidly changing
market, and the country now boasts
the worlds largest mobile population
despite having a relatively low mobile
penetration. The increased adoption
of mobile Internet capable devices,
the proliferation of competitive data
price plans, an increased focus by
many industries on deriving efficiency
through mobile Enterprise Information
Services and the astounding technology
advances happening in China mean
that China is likely to continue driving
adoption and innovation in the mobile
Internet for many years to come.
Looking Forward:
Sales of smartphones and smart-
like phones will increase as 3G gains
popularity.
E-readers will continue to show
strong growth, while tablets will
take longer to gain favor due to
their high prices.
118
119
5
lnLerneL and Mobile LaLa Users in China
lnLerneL users lnLerneL/mobile daLa users (|n t|oasanJs) Mobile inLerneL users
Mobile daLa users as percenL o lnLerneL users
20
80
40
60

2006 1H 2006 2H 200/ 1H 2008 1H 2009 1H 2010 1H 200/ 2H 2008 2H 2009 2H 2010 2H
2006 1H 2006 2H 200/ 1H 2008 1H 2009 1H 2010 1H 200/ 2H 2008 2H 2009 2H 2010 2H
98
8
8
I

I

I I
8

II

Source: CNNIC Internet Report, 2006- 2010
PART 3:
How To Win In China
122
123
3.1 The Next Great Frontier:
Chinas Lower Tier Cities
124
Demand Strategy
Nielsens Demand Strategy helps you to identify your
customers' unsatised demand and meet that demand
by delivering the Right Products to the Right Place,
at the Right Price, and at the Right Time.
125
When people think about Chinas rise
as a global economic powerhouse,
they often visualize the stunning
development underway in cities such
as Shanghai, Beijing and Guangzhou.
The prosperous residents of these
cosmopolitan cities are an important
target audience for advertisers. But
the bigger story is how development
has spread beyond these cities and
throughout China, with a large and
growing middle class that has the ability
(and just as importantly, the desire)
to spend. Residents of lower tier cities
and even those living in rural areas
now have greater buying power thanks
to economic growth and improving
wages, and present an enormous
opportunity for manufacturers who
know how to connect with them.
Growing Affluence Fuels
Demand
As referenced earlier in this publication,
Chinese consumer confidence took
off during the first half of 2010,
but declined in the second half.
Nonetheless, China continued to rank
as one of the most optimistic of the
53 countries The Nielsen Company
monitors on a quarterly basis. The
declines in the second half of the year
would have been greater, however, were
it not for growing levels of confidence
3.1
The Next Great Frontier: Chinas Lower Tier
Cities
among consumers in Tier 3 and 4 cities.
Those living in the Central and Western
regions of the country were increasingly
confident despite inflationary pressures.
While these regions are less affluent
than the more densely populated East,
they have been the focus of significant
government attention and investment
for much of the past decade.
As a result, these regions are catching
up in terms of income levels and
consumers living in these cities are
noticing the improvement. Research
conducted by the Chinese government
and Nielsen indicates that once
household income in urban areas
reach the Rmb6,000 level (Rmb7,500
at 2010s currency), consumption of
durable goods such as refrigerators, air
conditioners and mobile phones rise
significantly. For urban areas in the
whole of the country, that level was
reached in 1999, and sales of durables
exploded:
126
Explosive Growth In Urban Demand When Per Capita Annual
Income Reaches RMB 6,000
Tier 5
169 million
Households
161 million Tier 3 and 4 households are the next frontier
Tier 4
Tier 3
75 million
Tier 4
86 million
Households
Tier 1
16 million
Households
Households
Tier 2
38 million
Households
2 trillion
Income
V l
3 trillion
Income
V l
3 trillion
Income
V l
4 trillion
Income
V l
1 trillion
Income
V l Value Value Value Value Value
The Size Of The Prize
Source: GDR, ACMR, Nielsen Research
Refrigerator
Color Television Set
Computer
Air Conditioner
Ownership of major durable consumer goods per 100 urban households in year end
1999 Urban household
income appliance
consumption exploded
when incomes reached
RMB 6000
RMB 7506 in
today's prices
Source: China Statistical Yearbook, CICC Research, Nielsen Research
127
Tier 3 and 4 cities have already crossed
this milestone and offer a ready market
for modern trade and products. But
before retailers and manufacturers
enter these new markets, two critical
questions must be answered: a) What is
the actual potential of this demographic?
And b) How do marketers reach these
consumers?
Sizing And Seizing The
Opportunity
Residents of Tier 1 and 2 cities account
for 54 million households and an
estimated Rmb 2 trillion in income.
By comparison, Tier 3 and 4 cities
are estimated to number 160 million
households almost triple the number
of Tier 1 and 2 and another Rmb 1
trillion in income. While residents
of Tier 3 and 4 cities may not be as
affluent as their neighbors in Tier 1 and
2 cities, that is quickly changing. Income
levels are rising, and a vast middle class
is emerging throughout China, with
those living outside of the key cities
having unmet needs.
25,088
17,333
11,782
8,416
5,714
RMB 7506
RMB 1196
Fridge
Color TV
Computer
Air conditioners
Food
Basic Needs
Estimated Annual Income Per Capita- 2009
Tiers 3 And 4 Have Crossed The Threshold, Offering A Ready Market
For Modern Goods And Services
Source: GDR, ACMR, Nielsen Research
128
While lower tier cities comprise 87
percent of Chinas population, they
account for 64 percent of retail sales
(in the Modern trade), suggesting that
retailers with the capacity to expand
have an eager market awaiting their
stores.
The question for retailers,
manufacturers and service providers
is how to quantify this opportunity.
Nielsen uses a very simple equation:
% stating goals estimated number of
households = opportunity size
First, Nielsen surveyed people across
the country to determine their spending
priorities. In Tier 3 and 4 cities,
residents indicated a strong desire to
invest in the future and improve their
present quality of life.
As such, interest in savings products
and childrens education represent
tremendous sectors for growth.
In terms of improving present quality of
life, respondents indicated a desire to buy
new clothes, upgrade the brands of foods
they purchase and take tours. Longer
term, they hope to improve quality of life
by buying a new home or car.
Unmet NeedsLower Tiers Account For 87% Of Population But
64% Retail Sales
87%
64%
13%
36%
0%
25%
50%
75%
100%
Population Share Retail Sales Share
Upper Tier
Lower Tier
City Tier Importance- 2009 (Nielsen Universe)
Source: Nielsen Linx Retail Universe Master- 2009
129
Financial Products And Commercial Education Could Offer The
Highest Potential Given Their Strong Commitment To Savings And
Education
89 mn
147 mn
129 mn
118 mn
8
108 mn
Million Households
(Tiers 3 and 4)
Source: Nielsen Linx Retail Universe Master- 2009
What Are Your Lifetimes Goals and Priorities?
Lower Tier
Upper Tier
Savings
Lifestyle
Improve my standard of living
Build up my savings
Education
Children's education
Income Growth
Improve my educational skills
Increase income through investments
in stocks/funds
Health
in stocks/funds
Invest in health products and services
35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95%
Pay off debts/loans
Source: Nielsen Consumer Survey-2010
Improving The Present And Investing In The Future
130
Fashion, FMCG And Vacations Will Be The 3 Immediate Lifestyle
Drivers. Buying A Car In The Next 3 Years Tops The High Spend List
Opportunity Sizing (% Stating Goals x Estimated no of Households )
Fashion FMCG Leisure
Home Improvement
Cars Homes Jewelry Consumer Durables
147 mn
Apparels
85 mn
82 mn
Cars
New Homes
129 mn
FMCG
Vacation Packages
82 mn
77 mn
New Homes
Jewelry
105 mn
108 mn
Restaurants
Vacation Packages
66 mn
60-70 mn
Brown and White Goods
Computers
mn
61mn
Toys
89 mn 89
Mobile Phones
82 mn Home Improvement
61mn
Toys
Lifestyle Drivers: Short Term Indulgence, Try New Things, Upgrade
The next 12 months
How Do You Plan to Improve Living Standards?
Buy New clothes
Try Good quality food brands Try Good quality food brands
Tours/vacations
Dining out/entertainment Dining out/entertainment
Upgrade household care products
Lower Tier
Mobile phone
Try Good quality personal care
products
Upper Tier
Home improvements
131
Implications: A Vast And Varied Demand Potential Waits To Be
Tapped
Straddling The Income Pyramid Is One Strategy To Follow
Source: GDR, ACMR, Nielsen Research- 2010
22 mn HH
Affluent
109 mn HH
Rising Middle Class
30 mn HH
Bottom of The Pyramid
Using our equation for sizing the
opportunities, fashion, fast-moving
consumer goods (FMCG) and dining
represent the top categories for strong
growth, while cars, new homes and
jewelry topped the list of high-spend
categories.
How to Win these Consumers
Beyond knowing Tier 3 and 4 consumer
priorities, retailers, manufacturers and
service providers need to understand
how to reach these potential buyers
if they want to capitalize on this
vast potential market. Based on our
research, there are five key themes to
reflect upon:
1. Communication around social themes
such as family and maintaining face
will have a strong appeal
2. Local and multinational brands are on
a level playing field
3. TV and word-of-mouth remain the
most important influencers
4. Straddling the income pyramid is one
way to build brand loyalty
5. Optimize modern trade hubs as a
go-to-market strategy for FMCG
While consumers in Tier 3 and 4 cities
value financial success, they seek
greater balance between work and
family life. They are less independent
132
than Tier 1 consumers and seek social
acceptance, and a social context is
important to them in journey toward
success. Marketers must incorporate
these themes in advertisements.
Further, the size the of the brand
matters more than whether it is
local or foreign: bigger is better, and
a strong advertising presence on TV,
in particular, reassures these less-
confident consumers.
Winning Tips For Lower Tiers
Lacking confidence in making the
purchase, low-tier consumers care
more about social acceptance thus
prefer big brand
TV and Word Of Mouth are still
important now but start investing in
digital media
Having strong aspiration of improving
their life, whenever they can step up
their consumption, they will
Modern Trade enjoys high
productivity but develop in cluster
Upper and Lower Tiers priority needs
are not that different. The difference
lies in exposure to products and
services
Invest and innovate in building a

portfolio covering high to economic
products so that when consumers
trade up, they stay loyal
Build Communication Stories
Around Social Themes to gain
acceptance in lower tiers
Riding on the Super and Growing
hubs of Modern Trade to deepen
distribution and reach low-tier
consumers effectively and
efficiently
The Takeaway: A Tremendous
Opportunity Exists
Emerging cities may not have the
excitement of Shanghai or Beijing, but
they are quickly coming into their own,
with hard-working people eager to
improve their lot in life for themselves
and their families. While that has always
been a goal for most Chinese, the nations
rapid development has increasingly made
it a reality, with better jobs, wages and
living conditions. Citizens are optimistic
and eager to participate in the countrys
prosperity. But for marketers looking
to tap this opportunity, they would be
133
Looking Forward:
Tier 3 and 4 cities will continue
to develop rapidly, and advertisers
will increasingly take note of these
markets that hold the promise of
strong growth.
Consumers living in lower tier
cities will feel a greater impact from
inflation. If it rises beyond what
is considered reasonable, expect
consumer confidence to suffer.
Retailers and manufacturers
will build up and/or enhance their
distribution networks in these
areas so that they can better serve
consumers in these areas.
somewhat foolhardy to apply the same
strategies used in the Tier 1 and 2 cities.
They need to take a different approach to
reach the emerging city consumer.
134
135
3.2 Unlock the 8
Common Myths About
Innovation in China
136
Volume
forecast
Product Innovation
Nielsens Product Innovation Solution helps you evaluate
and optimize products chances of success in-market,
improve the Positioning and Performance, and refne
Go-To-Market Strategies.
rice Optimal p
137
3.2
Unlock the 8 Common Myths About
Innovation in China
The common perceptions of many
particularly those outside of China
is that the opportunities in the
marketplace are based solely on the
size of the country and that little else
is required in the way of innovation. Or
that multinational corporations (MNCs)
automatically have a leg-up over local
companies, who simply copy foreign-
designed products and mass produce
them. Of course, 1.3 billion people
represent a massive potential market,
but that perception is overly simplistic;
and the latter points may have been
true 10 or 20 years ago, but certainly
hold little, if any validity in todays
China.
For one, China cannot be viewed
as a single market. The country is
experiencing strong overall economic
growth, but the effect of that
prosperity varies by region and city size.
Consumers in Shanghai and Beijing are
maturing, while consumers in Tier 2,
3, and 4 cities are in some cases only
just starting to realize the gains from
development. It is a complex market,
8 Innovation Myths In China
1} 6h|na = |nnovat|on
|nnovat|on |n 6h|na =success guaranteed
3} 6h|na = 0ther countr|es
4} |nnovator > Fo||ower
5} Hu|t|nat|ona| company = |nnovator
} Loca| company = Fo||ower
7} Loca| brand = Hass
8} R&0 8pend|ng = 8uccess
138
one that requires innovation from
brands whether they belong to Chinese
companies or MNCs.
Breaking the Myths:
1. China is not innovative
The fact is, the number of patents
being issued in China has increased
sharply over the past five years, from
268 patents granted in 2006 to more
than 600 in 2010. Whats more, all
of the leading global brands, such as
Procter & Gamble, Unilever, Kraft and
Coca-Cola, have established research
and development (R&D) centers in
the country. Today, China ranks third
worldwide in terms of innovation
testing
1
.
2. Innovation is easy and guarantees
success
Innovation is never easy, and based on
Nielsens experience just two percent
of new initiatives are actually successful
in the market. Even megabrands
from overseas require a long-term
commitment to spur growth in China,
and the investment required in building
recognition and equity, especially in
year one, is high.
3. Innovation in China means
something different than in other
countries
Of course the country has its own
culture and habits, but the ingredients
behind innovation success are common
around the world. Attributes such
as a distinct consumer proposition,
providing a unique solution to address
a substantial need or desire and have a
focused and credible message are vital.
4. Innovators are always more
successful than followers
First movers can have an advantage
provided they create the category
and set a high entry barrier, but even
successfully achieving these is no
guarantee for success. Second movers
can win too provided they act quickly
behind the first mover, differentiate
their products in a salient way and
outspend the first mover in terms of
distribution and awareness building. But
simply copying a product rarely works.
5. Multinational corporations drive
innovation in China
Multinationals have a lot going for
them: vast resources, established track
records and varied products. But these
factors dont guarantee success, nor
do they equate to innovation. Most
MNCs move into the Chinese market by
importing brands from other markets,
localizing brands, or acquiring Chinese
brands. The fact is, MNCs have actually
produced few truly China-specific
innovations.
1
As conducted by Nielsen BASES
139
6. Local companies are not innovators
This may have been true in the past, but
not anymore. Due to superior consumer
understanding, Chinese companies are
making tremendous gains in the market.
Some companies that once produced
copies of a foreign product are going
legit because of this market knowledge
and producing innovative goods.
7. Local brands cannot compete in
premium categories
While premium and luxury brands from
overseas have a certain cache and will
always be sought after, local brands
are becoming increasingly successful,
particularly by playing the Chinese

card and highlighting the advantage of
using local ingredients.
8. Big research and development
spending guarantees innovation
success
Simply throwing money at something
never guarantees success. Innovation
is a combination of knowledge,
engagement, process and/or talent.
140
Looking Forward:
Local companies are becoming
more innovative, but dont expect
the MNCs to sit idly by: expect to
see them ramp up their R&D in
China.
More local brands will go
global, particularly in sectors such
as automobiles and consumer
electronics.
Patent filings in China will
outpace Japan and the U.S.
Growing demand in Tier 3 and
4 cities will require manufacturers
to innovate even more to appeal to
price-sensitive consumers who also
want high quality goods.
141
142
APPENDIX
143
2009
Quarter 1 Quarter 2 Quarter 3 Quarter 4
China Consumer Condence Index
1
Total China 89 95
Tier 1
2
NA 93
Tier 2 NA 88
Tier 3 NA 92
Tier 4 NA 96
Tier 5 NA 96
Retail Volume Sales
3
Index
Total China 1.02 1.03
Tier 1 0.99 0.98
Tier 2 0.94 1.00
Tier 3 1.00 1.02
Tier 4 1.00 1.07
Tier 5 1.14 1.04
Retail Value Sales
3
Index
Total China 1.01
1.01
Tier 1 0.97
0.99
Tier 2 0.94
0.99
Tier 3 0.99
1.01
Tier 4 1.00
1.03
Tier 5 1.20 1.00
Advertising Expenditure
4
Index
Total China 1.03 1.17
Television 1.02 1.19
Print (Newspaper + Magazine) 1.05 1.12
Radio 1.01 1.12
Internet 1.19 1.47
# of Online Advertisers
5
Index 1.58 1.45
Mobile Users
6
Index 1.16 1.15
Innovation
FMCG Innovation Pipeline Index
7
1.02 1.10
Current FMCG Innovation Flow Index
8
1.01 0.70
% of Value Sales Sold in the Presence of Deal 35% 35%
GDP
9
+6.1% +7.9%
-1.2% -1.7%
Nielsen
China Market Beat
Footnote:
1. Source of data: Nielsen Consumer Condence Survey. Q4 2010 Global Consumer Condence Index is 90
2. Denition for the city tier:
Tier 1: Beijing, Shanghai, Guangzhou Tier 2: Provincial capital cities Tier 3: Prefecture level cities
Tier 4: County level cities Tier 5: Towns and villages
3. Index is % change vs same period in prior year. An index above 1.00 means there is a growing trend. Source of data: Nielsen Retail Measurement
4. Index is % change vs same period in prior year. An index above 1.00 means there is a growing trend. Source of data: Nielsen Media Services
5. Index is % change vs same period in prior year. An index above 1.00 means there is a growing trend. Source of data: Nielsen Online Research
6. An index above 1.00 means there is a growing trend. Source of data: GSMA, based on numbers provided by the mobile network operators
7. FMCG Innovation Pipeline Index reects the level of FMCG innovation activity in the pipeline, not yet entered into the market.
An index above 1.00 means innovation pipeline activity is rising. Source of data: Nielsen BASES
8. Current FMCG Innovation Flow Index reects the number of new items that entered in the market in the latest period.
An index above 1.00 means innovation activity is rising. Source of data: Nielsen Retail Measurement
9. December CPI is used as the CPI for Q4, March for Q1, June for Q2 and September for Q3.
Source of data: National Bureau of Statistics of China
Consumer Price Index
9
(CPI)
Versus Same Period in Prior Year

+6% +4%
101
102
104
104
106
96
1.00
1.01
1.01
1.01
1.03
0.97
1.01
0.99
1.01
1.01
1.05
0.99
1.19
1.17
1.27
1.19
1.31
1.19
1.15
35%
+2%
+8.9%
-0.8%
10. Please email Chinainfo@nielsen.com or contact any Nielsen associate for any enquiry.

1.34
0.65
*
*
20110223
104
107
101
103
107
103
1.08
1.07
1.09
1.11
1.12
1.03
1.09
1.07
1.09
1.12
1.13
1.03
1.19
1.17
1.23
1.24
1.32
1.28
1.17
1.16
0.60
35%
+1%
+10.7%
+1.9%
2010
Quarter 1
108
106
105
105
107
111
1.19
1.17
1.19
1.34
1.56
1.36
1.17
1.30
1.38
34%
-1%
+11.9%
+2.4%
1.09
1.07
1.06
1.11
1.14
1.05
1.11
1.09
1.08
1.14
1.16
1.07
Quarter 3
109
101
98
100
104
117
1.12
1.12
1.13
1.29
1.12
1.26
1.17
0.84
34%
0
+10.3%
+2.9%
1.09
1.05
1.05
1.13
1.15
1.08
1.12
1.07
1.07
1.15
1.17
1.10
1.47
Quarter 2
104
101
101
104
102
106
1.07
1.08
1.04
1.23
1.04
1.13
1.17
1.07
33%
-2%
+9.6%
+3.6%
1.09
1.05
1.04
1.12
1.13
1.07
1.12
1.10
1.08
1.16
1.15
1.09
1.40
Quarter 4
100
95
98
95
95
107
1.08
1.07
1.11
1.23
1.12
1.12
1.16
1.28
35%
0
+9.8%
+4.6%
1.08
1.05
1.04
1.11
1.11
1.08
1.14
1.10
1.09
1.17
1.16
1.14
1.35
144
2006 2010 Consumer Confidence Index
Chinese Consumer Confidence Index
87
90
81
96
89
94
104
109
100
99
97
94
88
84
77
82
86 92
93
90
108
106
100
83
82
80
80
84
82
85
87
81
105
106
98
95
101
108 104
60
70
80
90
100
110
2nd
Half
'06
1st
Half
'07
2nd
Half
'07
1st
Half
'08
2nd
Half
'08
1st
Quart
'09
2nd
Quart
'09
3rd
Quart
'09
4th
Quart
'09
1st
Quart
'10
2nd
Quart
'10
3rd
Quart
'10
4th
Quart
'10
Global Average US China
145
108
106
105
105
107
111
109
101
98
100
104
117
104
101 101
104
102
106
100
95
98
95 95
107
National Tier 1 Tier 2 Tier 3 Tier 4 Rural Areas
Q1 Q2 Q3 Q4
2010 Chinese Consumer Confidence Index By City Tier
146
China City Tier Definition
Nielsen
City Category
Tier
Denition
The city division standard of Nielsen is the same
as State's Administrative Divisions.
Key Cities Tier 1 Beijing, Shanghai, Guangzhou, (Chengdu)
A cities Tier 2
Provincial capitals and economic developed cities such
as Qingdao, Dalian and Shenzhen.
B cities Tier 3
Prefecture-level Cities
(Zhuhai, Tangshan)
C cities Tier 4 County-level Cities (Yiwu, Yixing)
D cities Tier 4 County Government(Benxi, Huian)
Towns (TGTS) & Villages Tier 5
Town Government (Qingguitown), Townships
(Shenkeng village), Villagers Committees
General Definition of China City Tiers
147
TIER 2
CITY PROVINCE
CHANGCHUN JILIN
CHANGSHA HUNAN
CHONGQING CHONGQING
DALIAN LIAONING
FUZHOU FUJIAN
GUIYANG GUIZHOU
HAERBIN HEILONGJIANG
HANGZHOU ZHEJIANG
HEFEI ANHUI
JINAN SHANDONG
KUNMING YUNNAN
NANCHANG JIANGXI
NANJING JIANGSU
NANNING GUANGXI
QINGDAO SHANDONG
SHENYANG LIAONING
SHENZHEN GUANGDONG
SHIJIAZHUANG HEBEI
TAIYUAN SHANXI
TIANJIN TIANJIN
WUHAN HUBEI
XiAN SHANNXI
ZHENGZHOU HENAN
TIER 3
CITY PROVINCE
ANKANG SHAANXI
ANQING ANHUI
ANSHAN LIAONING
ANSHUN GUIZHOU
ANYANG HENAN
BAICHENG JILIN
BAISHAN JILIN
BAISHE GUANGXI
BAODING HEBEI
BAOJI SHAANXI
BAOSHAN YUNNAN
BAZHONG SICHUAN
BEIHAI GUANGXI
BENBU ANHUI
BENXI LIAONING
BINZHOU SHANDONG
BOZHOU ANHUI
CANGZHOU HEBEI
CHANGDE HUNAN
CHANGZHI SHANXI
CHANGZHOU JIANGSU
CHAOHU ANHUI
CHAOYANG LIAONING
CHAOZHOU GUANGDONG
CHENGDE HEBEI
CHENZHOU HUNAN
CHIZHOU ANHUI
CHONGZUO GUANGXI
CHUZHOU ANHUI
DANDONG LIAONING
DAQING HEILONGJIANG
DATONG SHANXI
TIER 1
BEIJING
GUANGZHOU
SHANGHAI
(CHENGDU)
148
TIER 3
CITY PROVINCE
DAZHOU SICHUAN
DEYANG SICHUAN
DEZHOU SHANDONG
DONGGUAN GUANGDONG
DONGYING SHANDONG
EZHOU HUBEI
FANGCHENGANG GUANGXI
FOSHAN GUANGDONG
FUSHUN LIAONING
FUXIN LIAONING
FUYANG ANHUI
FUZHOU JIANGXI
GANZHOU JIANGXI
GUANG'AN SICHUAN
GUANGYUAN SICHUAN
GUIGANG GUANGXI
GUILIN GUANGXI
HANDAN HEBEI
HANZHONG SHAANXI
HEBI HENAN
HEGANG HEILONGJIANG
HEIHE HEILONGJIANG
HENGSHUI HEBEI
HENGYANG HUNAN
HEYUAN GUANGDONG
HEZE SHANDONG
HEZHOU GUANGXI
HUAI'AN JIANGSU
HUAIBEI ANHUI
HUAIHUA HUNAN
HUAINAN ANHUI
HUANGGANG HUBEI
HUANGSHAN ANHUI
HUANGSHI HUBEI
HUIZHOU GUANGDONG
TIER 3
CITY PROVINCE
JI'AN JIANGXI
JIANGMEN GUANGDONG
JIAOZUO HENAN
JIAXING ZHEJIANG
JIEYANG GUANGDONG
JILIN JILIN
JINCHENG SHANXI
JINGDEZHEN JIANGXI
JINGMEN HUBEI
JINGZHOU HUBEI
JINGZHOU LIAONING
JINHUA ZHEJIANG
JINING SHANDONG
JINZHONG SHANXI
JIUJIANG JIANGXI
JIXI HEILONGJIANG
KAIFENG HENAN
LAIBIN GUANGXI
LAIWU SHANDONG
LANGFANG HEBEI
LESHAN SICHUAN
LIANYUNGANG JIANGSU
LIAOCHENG SHANDONG
LIAOYANG LIAONING
LIAOYUAN JILIN
LIJIANG YUNNAN
LINFEN SHANXI
LINYI SHANDONG
LISHUI ZHEJIANG
LIUAN ANHUI
LIUPANSHUI GUIZHOU
LIUZHOU GUANGXI
LONGYAN FUJIAN
LOUDI HUNAN
LULIANG SHANXI
149
TIER 3
CITY PROVINCE
HULUDAO LIAONING
HUZHOU ZHEJIANG
JIAMUSI HEILONGJIANG
LUOHE HENAN
LUOYANG HENAN
LUZHOU SICHUAN
MAANSHAN ANHUI
MAOMING GUANGDONG
MEISHAN SICHUAN
MEIZHOU GUANGDONG
MIANYANG SICHUAN
MUDANJIANG HEILONGJIANG
NANCHONG SICHUAN
NANPING FUJIAN
NANTONG JIANGSU
NANYANG HENAN
NEIJIANG SICHUAN
NINGBO ZHEJIANG
NINGDE FUJIAN
PANJING LIAONING
PANZHIHUA SICHUAN
PINGDINGSHAN HENAN
PINGXIANG JIANGXI
PUTIAN FUJIAN
PUYANG HENAN
QINGYUAN GUANGDONG
QINHUANGDAO HEBEI
QINZHOU GUANGXI
QIQIHAER HEILONGJIANG
QITAIHE HEILONGJIANG
QUANZHOU FUJIAN
QUJING YUNNAN
QUZHOU ZHEJIANG
RIZHAO SHANDONG
SANMENXIA HENAN
TIER 3
CITY PROVINCE
SHANGRAO JIANGXI
SHANTOU GUANGDONG
SHANWEI GUANGDONG
SHAOGUAN GUANGDONG
SHAOXING ZHEJIANG
SHAOYANG HUNAN
SHIYAN HUBEI
SHUANGYASHAN HEILONGJIANG
SHUOZHOU SHANXI
SIPING JILIN
SONGYUAN JILIN
SUIHUA HEILONGJIANG
SUINING SICHUAN
SUIZHOU HUBEI
SUQIAN JIANGSU
SUZHOU ANHUI
SUZHOU JIANGSU
TAI'AN SHANDONG
TAIZHOU JIANGSU
TAIZHOU ZHEJIANG
TANGSHAN HEBEI
TIELING LIAONING
TONGCHUAN SHAANXI
TONGHUA JILIN
TONGLING ANHUI
TONGREN GUIZHOU
WEIFANG SHANDONG
WEIHAI SHANDONG
WEINAN SHAANXI
WENZHOU ZHEJIANG
WUHU ANHUI
WUXI JIANGSU
WUZHOU GUANGXI
XIAMEN FUJIAN
XIANGFAN HUBEI
150
TIER 3
CITY PROVINCE
SANMING FUJIAN
SHANGLUO SHAANXI
SHANGQIU HENAN
XIANGTAN HUNAN
XIANNING HUBEI
XIANYANG SHAANXI
XIAOGAN HUBEI
XINGTAI HEBEI
XINXIANG HENAN
XINYANG HENAN
XINYU JIANGXI
XINZHOU SHANXI
XUANCHENG ANHUI
XUCHANG HENAN
XUZHOU JIANGSU
YA'AN SICHUAN
YANAN SHAANXI
YANCHENG JIANGSU
YANGJIANG GUANGDONG
YANGQUAN SHANXI
YANGZHOU JIANGSU
YANTAI SHANDONG
YIBIN SICHUAN
YICHANG HUBEI
YICHUN HEILONGJIANG
YICHUN JIANGXI
YINGKOU LIAONING
YINGTAN JIANGXI
YIYANG HUNAN
YONGZHOU HUNAN
YUEYANG HUNAN
YULIN GUANGXI
YULIN SHAANXI
YUNCHENG SHANXI
YUNFU GUANGDONG
TIER 3
CITY PROVINCE
ZHANGJIAKOU HEBEI
ZHANGZHOU FUJIAN
ZHANJIANG GUANGDONG
ZHAOQING GUANGDONG
ZHAOTONG YUNNAN
ZHENJIANG JIANGSU
ZHONGSHAN GUANGDONG
ZHOUKOU HENAN
ZHOUSHAN ZHEJIANG
ZHUHAI GUANGDONG
ZHUMADIAN HENAN
ZHUZHOU HUNAN
ZIBO SHANDONG
ZIGONG SICHUAN
ZIYANG SICHUAN
ZUNYI GUIZHOU
YUXI YUNNAN
ZAOZHUANG SHANDONG
ZHANGJIAJIE HUNAN
151
Year Quarter
Gross Domestic
Product
Primary Industry
Secondary
Industry
Tertiary Industry
100 million yuan
2007
I-II 115,998.9 9,283.3 58,013.8 48,701.8
I-III 180,101.1 17,936.8 87,071.1 75,093.2
I-IV 265,810.3 28,627.0 125,831.4 111,351.9
2008
I 66,283.8 4,678.6 32,158.4 29,446.8
I-II 140,477.8 11,696.6 70,543.5 58,237.8
I-III 217,026.1 21,868.9 105,889.2 89,268.0
I-IV 314,045.4 33,702.0 149,003.4 131,340.0
2009
I 69,816.9 4,627.0 32,658.5 32,531.4
I-II 148,203.6 11,830.7 71,702.7 64,670.2
I-III 231,303.3 22,142.2 109,101.2 100,059.9
I-IV 340,902.8 35,226.0 157,638.8 148,038.0
2010
I 81,887.0 5,139.0 39,243.5 37,504.4
I-II 173,615.2 13,367.0 85,830.0 74,418.2
I-III 270,234.2 25,600.0 129,324.6 115,309.7
I-IV 397,983.2 40,497.0 186,480.8 171,005.4
Year-on-year Growth Rate
2007
I-II 14.5 4.0 15.3 15.5
I-III 14.4 4.3 15.2 16.1
I-IV 14.2 3.7 15.1 16.0
2008
I 11.3 2.7 12.0 11.6
I-II 11.0 3.4 11.9 11.4
I-III 10.6 4.4 11.2 11.2
I-IV 9.6 5.4 9.9 10.4
2009
I 6.6 3.5 5.8 7.9
I-II 7.5 3.8 7.1 8.5
I-III 8.2 4.0 8.1 9.3
I-IV 9.2 4.2 9.9 9.6
2010
I 11.9 3.8 14.5 10.2
I-II 11.1 3.6 13.2 9.6
I-III 10.6 4.0 12.6 9.5
I-IV 10.3 4.3 12.2 9.5
Note: Absolute figures in this table are calculated at current prices, and the year-on-year growth rates are calculated at
constant prices.
China GDP Overview (2007 - 2010, by Quarter)
Source: China Monthly Economic Indicators
152
Year Month
General
Consumer Price
Index
Food Grain
Meal, Poultry
and Their
Products
Eggs
Aquatic
Products
Fresh
Vegetables
Fresh Fruits
Same Month / Period of Preceding Year = 100
2009 1-12 99.3 100.7 105.6 91.3 101.6 102.5 115.4 109.1
1 101.5 103.7 109.8 96.5 106.2 103.9 117.1 109.8
2 102.7 106.2 109.6 98.4 108.7 108.8 125.5 119.0
3 102.4 105.2 109.2 97.8 105.7 106.3 118.5 118.8
4 102.8 105.9 110.7 98.2 101.8 105.5 124.9 116.4
5 103.1 106.1 111.5 100.8 100.2 105.6 121.3 111.8
6 102.9 105.7 111.7 101.8 102.2 106.5 114.6 109.2
7 103.3 106.8 111.8 104.1 107.5 107.6 122.3 104.5
8 103.5 107.5 112.0 105.4 109.6 108.5 119.2 108.1
9 103.6 108.0 112.1 105.4 109.9 110.9 118.0 113.2
10 104.4 110.1 112.3 106.8 110.5 111.1 131.0 117.7
11 105.1 111.7 114.7 109.9 117.6 111.9 121.3 128.1
12 104.6 109.6 115.6 110.2 119.0 110.9 94.3 134.4
2010 1-12 103.3 107.2 111.8 102.9 108.3 108.1 118.7 115.6
2009 1-12 99.1 101.0 105.7 91.5 101.3 102.7 115.0 109.0
1 101.4 103.7 109.6 96.6 106.1 104.0 116.8 109.2
2 102.6 106.2 109.5 98.3 108.4 108.8 124.6 118.8
3 102.3 105.2 109.1 97.7 105.5 106.4 117.5 117.9
4 102.7 105.9 110.6 98.0 101.7 105.8 124.0 115.6
5 102.9 106.0 111.3 100.4 100.1 105.9 120.4 111.6
6 102.8 105.5 111.5 101.6 102.2 106.9 113.4 108.4
7 103.2 106.7 111.5 103.9 107.5 107.9 121.9 103.2
8 103.4 107.4 111.7 105.2 109.8 109.0 118.8 106.0
9 103.5 108.0 111.8 105.0 110.0 111.6 117.3 111.7
10 104.2 110.0 112.0 106.2 110.7 111.8 130.1 117.3
11 104.9 111.6 114.0 109.3 118.2 112.5 120.7 128.5
12 104.4 109.4 115.1 109.9 119.5 111.4 92.9 135.7
2010 1-12 103.2 107.1 111.5 102.6 108.4 108.5 117.8 115.0
2009 1-12 99.7 100.1 105.5 90.8 102.0 101.7 116.7 109.5
1 101.8 103.8 110.1 96.2 106.4 103.3 118.3 111.3
2 102.9 106.3 109.8 98.6 109.1 108.6 128.4 119.3
3 102.6 105.4 109.5 98.0 106.2 105.9 121.4 121.5
4 103.0 106.0 110.9 98.5 101.9 104.5 127.7 118.8
5 103.3 106.3 112.0 101.7 100.3 104.2 124.3 112.4
6 103.2 106.1 112.2 102.2 102.3 104.9 118.3 111.6
7 103.5 107.2 112.1 104.5 107.5 106.3 123.6 108.5
8 103.7 107.9 112.4 105.9 109.2 107.5 120.7 114.6
9 103.9 108.4 112.5 106.3 109.7 109.1 120.2 117.7
10 104.7 110.2 113.0 107.9 110.1 109.6 133.7 118.9
11 105.6 112.1 116.0 111.2 116.6 110.1 123.1 126.8
12 105.1 110.1 116.4 110.9 118.0 109.5 98.6 130.5
2010 1-12 103.6 107.5 112.3 103.5 108.2 106.9 121.3 117.5
2010
2010
2010
National
Urban
Rural
2010 China CPI By Category
153
Year Month
Tobacco,
Liquor and
Articles
Clothing
Household
Facilities,
Articles and
Services
Health Cares &
Personal
Articles
Transportation and
Communication
Recreation,
Education,
Culture Articles
and Services
Residence
2009 1-12 101.5 98.0 100.2 101.2 97.6 99.3 96.4
1 101.5 99.6 98.9 102.3 99.5 98.8 102.5
2 101.6 98.7 99.2 102.4 100.1 100.8 103.0
3 101.7 98.9 99.3 102.5 100.0 100.3 103.3
4 101.7 98.7 99.5 102.8 100.0 100.4 104.5
5 101.7 98.8 99.7 103.2 100.1 100.6 105.0
6 101.7 99.0 100.0 103.2 99.7 100.9 105.0
7 101.6 99.2 100.2 103.3 99.3 101.1 104.8
8 101.5 98.8 100.4 103.3 99.4 101.2 104.4
9 101.4 98.5 100.4 103.4 99.3 101.2 104.3
10 101.5 98.7 100.5 103.7 99.5 100.9 104.9
11 101.6 99.3 100.7 104.0 99.3 100.6 105.8
12 101.8 100.1 101.2 104.0 99.3 100.7 106.0
2010 1-12 101.6 99.0 100.0 103.2 99.6 100.6 104.5
2009 1-12 101.7 97.8 100.3 101.1 97.3 98.8 95.4
1 101.7 99.8 98.7 102.2 99.3 98.0 102.7
2 101.7 98.5 99.1 102.3 99.9 100.6 103.1
3 101.9 98.9 99.1 102.5 99.8 99.9 103.4
4 101.9 98.6 99.4 102.7 99.8 100.1 104.6
5 101.9 98.7 99.5 103.1 99.9 100.4 105.1
6 101.9 98.9 99.9 103.2 99.5 100.8 105.1
7 101.7 99.2 100.2 103.3 99.2 101.0 104.8
8 101.6 98.8 100.4 103.3 99.2 101.2 104.5
9 101.4 98.3 100.4 103.4 99.1 101.2 104.3
10 101.6 98.4 100.5 103.7 99.3 100.7 104.7
11 101.7 99.0 100.7 104.1 99.1 100.5 105.5
12 101.9 99.9 101.3 104.1 99.1 100.6 105.6
2010 1-12 101.7 98.9 99.9 103.2 99.4 100.4 104.5
2009 1-12 101.3 98.4 100.0 101.5 98.2 100.6 98.5
1 101.3 99.1 99.4 102.6 99.9 100.3 102.1
2 101.4 99.2 99.6 102.7 100.7 100.8 102.7
3 101.5 99.1 99.7 102.7 100.7 100.7 103.1
4 101.4 99.1 99.8 103.0 100.6 100.8 104.2
5 101.5 99.1 100.0 103.3 100.8 100.8 104.8
6 101.6 99.3 100.1 103.3 100.4 100.9 104.8
7 101.5 99.1 100.2 103.4 99.9 101.1 104.6
8 101.3 98.8 100.3 103.3 100.1 101.1 104.3
9 101.2 99.1 100.4 103.4 100.0 101.1 104.3
10 101.3 99.5 100.5 103.6 100.2 101.1 105.1
11 101.4 100.2 100.7 103.9 100.1 101.0 106.6
12 101.6 100.6 100.7 103.7 100.1 101.0 106.9
2010 1-12 101.4 99.4 100.1 103.2 100.3 100.9 104.5
2010
National
Rural Same Month / Period of Preceding Year = 100
2010
2010
Urban Same Month / Period of Preceding Year = 100
154
2010 Basic Conditions of Chinas Urban Households Income (by Region)
2010 Cash Income of Chinas Rural and Urban Households
Quarter I-IV, 2010
Region
Number of
Households
Surveyed
Average
Household
Size
Average
Number of
Employed
Persons per
Household
Number of
Persons
Supported
by Each
Employed
Person
Per Capita
Income
Per Capita
Disposable
Income
Per Capita
Living
Expenditure
(household) (person) (person) (person) (yuan) (yuan) (yuan)
National 65,607 2.9 1.5 1.9 21,033.4 19,109.4 13,471.5
Beijing 5,000 2.8 1.6 1.8 33,360.4 29,072.9 19,934.5
Tianjin 1,500 2.9 1.5 1.9 26,942.0 24,292.6 16,561.8
Hebei 2,520 2.9 1.4 2.1 17,334.4 16,263.4 10,318.3
Shanxi 1,810 2.9 1.3 2.1 16,893.0 15,647.7 9,792.7
Inner Mongolia 2,350 2.8 1.5 1.9 19,014.2 17,698.2 13,994.6
Liaoning 4,300 2.7 1.4 2.0 20,014.6 17,712.6 13,280.0
Jilin 1,450 2.8 1.4 2.0 16,794.5 15,411.5 11,679.0
Heilongjiang 2,250 2.7 1.3 2.1 15,095.6 13,856.5 10,683.9
Shanghai 1,000 2.9 1.6 1.8 35,738.5 31,838.1 23,200.4
Jiangsu 5,099 2.8 1.4 2.0 25,115.4 22,944.3 14,357.5
Zhejiang 4,450 2.7 1.4 2.0 30,134.8 27,359.0 17,858.2
Anhui 2,500 2.8 1.5 1.9 17,626.7 15,788.2 11,512.6
Fujian 1,800 3.1 1.7 1.8 24,149.6 21,781.3 14,750.0
Jiangxi 1,230 2.8 1.5 1.9 16,558.0 15,481.1 10,618.7
Shandong 3,300 2.9 1.7 1.7 21,736.9 19,945.8 13,118.2
Henan 2,400 2.8 1.5 1.9 17,141.8 15,930.3 10,838.5
Hubei 1,900 2.9 1.5 2.0 17,572.8 16,058.4 11,451.0
Hunan 1,250 2.9 1.4 2.1 17,657.1 16,565.7 11,825.3
Guangdong 3,150 3.2 1.7 1.9 26,896.9 23,897.8 18,489.5
Guangxi 1,340 3.0 1.6 1.9 18,742.2 17,063.9 11,490.1
Hainan 600 3.3 1.5 2.1 16,929.6 15,581.1 10,926.7
Chongqing 2,050 2.9 1.6 1.9 18,990.5 17,532.4 13,335.0
Sichuan 2,650 2.9 1.5 1.9 17,128.9 15,461.2 12,105.1
Guizhou 1,670 3.0 1.4 2.1 15,138.8 14,142.7 10,058.3
Yunnan 1,750 2.9 1.4 2.0 17,478.9 16,064.5 11,074.1
Tibet 800 3.5 1.6 2.2 16,539.0 14,980.5 9,685.5
Shaanxi 1,500 2.8 1.5 1.9 17,064.7 15,695.2 11,821.9
Gansu 880 2.8 1.4 2.0 14,307.3 13,188.6 9,895.4
Qinghai 600 3.0 1.3 2.3 15,480.8 13,855.0 9,613.8
Ningxia 950 2.9 1.4 2.1 17,536.8 15,344.5 11,334.4
Xinjiang 1,560 3.0 1.5 1.9 15,421.6 13,643.8 10,197.1
155
2010 Cash Income of Chinas Rural Households (by Region)
Quarter I-IV, 2010
National 7,088.8 2,427.9 3,955.4 1,869.8 95.2 985.4 114.1 168.3 537.2
Beijing 14,793.8 8,224.2 3,365.0 661.8 126.3 1,061.8 133.8 1,329.8 1,874.8
Tianjin 12,509.0 5,245.7 6,325.0 1,953.5 21.2 1,707.5 241.4 353.3 585.0
Hebei 7,248.6 2,652.8 4,061.8 1,756.3 39.7 1,012.0 117.7 416.3
Shanxi 5,667.4 2,099.8 2,975.3 1,466.7 25.3 714.2 184.5 407.9
Inner Mongolia 7,718.2 1,036.6 5,882.5 2,930.4 28.1 2,586.7 0.6 112.2 686.9
Liaoning 9,907.7 2,648.6 6,557.3 3,240.3 23.2 2,361.7 78.2 70.4 631.4
Jilin 8,386.0 1,072.1 6,448.8 4,687.3 35.2 1,372.1 10.6 64.2 800.8
Heilongjiang 10,431.0 1,237.9 8,219.3 6,706.9 27.1 1,090.2 5.2 216.1 757.8
Shanghai 14,603.8 9,605.6 1,014.1 332.6 0 130.0 48.1 970.3 3,013.9
Jiangsu 10,230.8 4,862.8 4,272.7 1,443.5 77.9 519.9 381.4 361.6 733.6
Zhejiang 15,042.9 5,816.8 7,843.8 1,407.5 180.7 2,694.7 313.7 507.6 874.6
Anhui 5,959.8 2,201.6 3,259.3 2,028.9 71.2 426.0 81.1 103.2 395.7
Fujian 8,270.2 3,088.5 4,352.3 1,664.6 242.0 813.9 250.0 245.1 584.3
Jiangxi 6,462.1 2,394.6 3,532.5 1,832.6 110.2 614.4 92.0 78.1 457.0
Shandong 9,093.7 2,955.3 5,486.8 2,869.6 102.5 1,191.7 50.5 177.0 474.6
Henan 5,900.0 1,942.1 3,586.8 1,623.1 49.5 1,016.8 27.7 54.8 316.3
Hubei 6,664.4 2,185.6 4,063.4 2,306.3 60.4 675.2 323.8 86.6 328.9
Hunan 6,433.0 2,655.3 2,988.0 1,111.4 68.0 652.8 105.7 91.4 698.2
Guangdong 8,638.6 4,799.2 2,862.4 957.8 47.8 776.7 444.8 400.1 576.9
Guangxi 5,151.6 1,706.1 3,072.3 1,454.7 129.8 971.4 92.0 33.2 340.0
Hainan 6,118.3 1,261.5 4,366.4 1,430.7 831.4 786.9 588.6 107.8 382.6
Chongqing 5,312.9 2,334.8 2,244.5 680.0 66.5 964.2 50.1 81.3 652.3
Sichuan 5,626.2 2,247.2 2,711.0 713.4 47.8 1,241.3 91.4 140.4 527.7
Guizhou 3,448.3 1,303.7 1,571.9 573.7 44.6 545.3 5.4 114.5 458.4
Yunnan 4,565.2 928.9 3,077.5 1,507.3 407.3 770.8 9.7 171.1 387.7
Tibet 3,652.4 1,108.7 1,908.6 731.9 112.3 461.7 0.4 81.6 553.6
Shaanxi 5,032.7 1,734.4 2,791.7 1,458.8 56.0 599.4 9.6 79.5 427.1
Gansu 3,856.0 1,198.5 2,290.5 1,498.9 41.4 392.2 1.2 31.9 335.1
Qinghai 4,096.3 1,269.8 2,134.8 773.7 23.3 767.3 14.0 101.8 590.0
Ningxia 5,879.2 1,788.1 3,655.1 1,590.9 7.6 1,272.0 52.8 60.6 375.4
Xinjiang 7,517.3 556.3 6,525.3 4,517.5 172.2 1,284.9 106.9 328.8
Property
Income
Cash Income
Wages
Income
Household
Business
Income
Farming
Region
Transferred
Income
yuan / person
Forestry
Animal
Husbandry
Fishery
156
Basic Conditions of Chinas Urban Households Expenditure (by Region)
(household) (person) (person) (person) (yuan) (yuan)
5 . 5 8 3 7 . 4 0 8 , 4 9 . 1 5 . 1 9 . 2 7 0 6 , 5 6 l a n o i t a N
0 . 9 0 4 9 . 2 9 3 , 6 8 . 1 6 . 1 8 . 2 0 0 0 , 5 g n i j i e B
7 . 5 8 3 4 . 0 4 9 , 5 9 . 1 5 . 1 9 . 2 0 0 5 , 1 n i j n a i T
2 . 6 2 3 2 . 5 3 3 , 3 1 . 2 4 . 1 9 . 2 0 2 5 , 2 i e b e H
5 . 9 6 3 6 . 2 5 0 , 3 1 . 2 3 . 1 9 . 2 0 1 8 , 1 i x n a h S
Inner Mongolia 2,350 2.8 1.5 1.9 4,211.5 401.6
4 . 7 8 3 0 . 8 5 6 , 4 0 . 2 4 . 1 7 . 2 0 0 3 , 4 g n i n o a i L
0 . 1 9 3 9 . 7 6 7 , 3 0 . 2 4 . 1 8 . 2 0 5 4 , 1 n i l i J
Heilongjiang 2,250 2.7 1.3 2.1 3,784.7 429.7
7 . 4 1 6 0 . 7 7 7 , 7 8 . 1 6 . 1 9 . 2 0 0 0 , 1 i a h g n a h S
4 . 3 7 3 1 . 3 4 2 , 5 0 . 2 4 . 1 8 . 2 9 9 0 , 5 u s g n a i J
2 . 4 6 3 5 . 8 1 1 , 6 0 . 2 4 . 1 7 . 2 0 5 4 , 4 g n a i j e h Z
7 . 7 3 3 6 . 9 6 3 , 4 9 . 1 5 . 1 8 . 2 0 0 5 , 2 i u h n A
7 . 9 6 4 7 . 0 9 7 , 5 8 . 1 7 . 1 1 . 3 0 0 8 , 1 n a i j u F
1 . 3 5 3 4 . 5 9 1 , 4 9 . 1 5 . 1 8 . 2 0 3 2 , 1 i x g n a i J
9 . 3 4 3 9 . 5 0 2 , 4 7 . 1 7 . 1 9 . 2 0 0 3 , 3 g n o d n a h S
4 . 9 4 3 8 . 5 7 5 , 3 9 . 1 5 . 1 8 . 2 0 0 4 , 2 n a n e H
4 . 6 1 5 3 . 9 2 4 , 4 0 . 2 5 . 1 9 . 2 0 0 9 , 1 i e b u H
9 . 9 2 3 1 . 2 2 3 , 4 1 . 2 4 . 1 9 . 2 0 5 2 , 1 n a n u H
Guangdong 3,150 3.2 1.7 1.9 6,746.6 460.1
4 . 1 2 3 8 . 2 7 3 , 4 9 . 1 6 . 1 0 . 3 0 4 3 , 1 i x g n a u G
6 . 7 0 3 0 . 6 9 8 , 4 1 . 2 5 . 1 3 . 3 0 0 6 n a n i a H
8 . 1 1 3 6 . 2 1 0 , 5 9 . 1 6 . 1 9 . 2 0 5 0 , 2 g n i q g n o h C
4 . 6 3 3 6 . 9 7 7 , 4 9 . 1 5 . 1 9 . 2 0 5 6 , 2 n a u h c i S
0 . 0 2 3 7 . 3 1 0 , 4 1 . 2 4 . 1 0 . 3 0 7 6 , 1 u o h z i u G
3 . 5 3 3 5 . 3 9 5 , 4 0 . 2 4 . 1 9 . 2 0 5 7 , 1 n a n n u Y
4 . 2 3 4 6 . 7 4 8 , 4 2 . 2 6 . 1 5 . 3 0 0 8 t e b i T
2 . 0 9 3 4 . 1 8 3 , 4 9 . 1 5 . 1 8 . 2 0 0 5 , 1 i x n a a h S
8 . 2 5 3 2 . 2 0 7 , 3 0 . 2 4 . 1 8 . 2 0 8 8 u s n a G
3 . 2 5 4 8 . 4 8 7 , 3 3 . 2 3 . 1 0 . 3 0 0 6 i a h g n i Q
1 . 3 4 3 1 . 8 6 7 , 3 1 . 2 4 . 1 9 . 2 0 5 9 a i x g n i N
7 . 2 6 3 8 . 4 9 6 , 3 9 . 1 5 . 1 0 . 3 0 6 5 , 1 g n a i j n i X
Region
Food Grain
Average
Household
Size
Average
Number of
Employed
Persons Per
Household
Number of
Households
Surveyed
Number of
Persons
Supported
by Each
Employed Person
2010 Expenditure of Chinas Rural and Urban Households
Quarter I-IV, 2010
157
(yuan) (yuan) (yuan) (yuan) (yuan) (yuan) (yuan)
1,444.3 908.0 871.8 1,983.7 1,627.6 1,332.1 499.2
2,087.9 1,377.8 1,327.2 3,420.9 2,901.9 1,577.4 848.5
1,567.6 1,119.9 1,275.6 2,454.4 1,899.5 1,615.6 688.7
1,225.9 693.6 923.8 1,398.4 1,001.0 1,344.5 395.9
1,205.9 612.6 774.9 1,340.9 1,229.7 1,245.0 331.1
2,203.6 948.9 1,126.0 1,768.7 1,641.2 1,384.5 710.4
1,586.8 785.7 1,079.8 1,773.3 1,495.9 1,314.8 585.8
1,570.7 710.3 1,171.3 1,363.9 1,244.6 1,344.4 506.1
1,608.4 618.8 948.4 1,191.3 1,001.5 1,128.1 402.7
1,794.1 1,800.2 1,005.5 4,076.5 3,363.3 2,166.2 1,217.7
1,465.5 1,026.3 805.7 1,935.1 2,133.3 1,234.1 514.4
1,802.3 916.2 1,033.7 3,437.2 2,586.1 1,418.0 546.4
1,225.6 678.8 737.1 1,356.6 1,479.8 1,229.6 435.6
1,281.3 972.2 617.4 2,196.9 1,786.0 1,606.3 499.3
1,138.8 854.6 524.2 1,270.3 1,179.9 1,109.8 345.7
1,745.2 915.0 885.8 2,140.4 1,401.8 1,408.6 415.6
1,444.6 866.7 941.3 1,374.8 1,137.2 1,080.1 418.0
1,415.7 867.3 709.6 1,205.5 1,263.2 1,187.5 372.9
1,277.5 903.8 776.9 1,541.4 1,418.9 1,182.3 402.5
1,230.7 1,208.0 929.5 3,419.7 2,376.0 1,925.2 653.8
926.4 853.6 625.5 1,973.0 1,243.7 1,166.9 328.3
636.1 616.3 579.9 1,805.1 1,004.6 1,103.8 284.9
1,697.6 1,072.4 1,021.5 1,384.3 1,408.0 1,276.0 462.8
1,259.5 876.3 661.0 1,674.1 1,224.7 1,126.7 503.1
1,102.4 673.3 546.8 1,270.5 1,254.6 890.8 306.2
1,158.8 509.4 637.9 2,039.7 1,014.4 835.5 285.0
1,158.6 376.4 385.6 1,230.9 478.0 726.6 481.8
1,428.2 723.7 935.4 1,194.8 1,595.8 1,126.9 435.7
1,255.7 597.7 828.6 1,076.6 1,136.7 910.3 387.5
1,185.6 644.0 718.8 1,116.6 908.1 923.5 332.5
1,417.5 716.2 890.1 1,574.6 1,286.2 1,181.7 500.1
1,513.4 669.9 708.2 1,255.9 1,012.4 898.4 444.2
Clothing
Household
Facilities,
Articles
and Services
Medicines
and Medical
Services
Trasport,
Post and
Communi
-cation
Services
Recreation,
Education and
Cultural
Services
Residence
Miscellanc
-eous
Commodities
and Services
l a n o i t a N
g n i j i e B
n i j n a i T
i e b e H
i x n a h S
Inner Mongolia
g n i n o a i L
n i l i J
Heilongjiang
i a h g n a h S
u s g n a i J
g n a i j e h Z
i u h n A
n a i j u F
i x g n a i J
g n o d n a h S
n a n e H
i e b u H
n a n u H
Guangdong
i x g n a u G
n a n i a H
g n i q g n o h C
n a u h c i S
u o h z i u G
n a n n u Y
t e b i T
i x n a a h S
u s n a G
i a h g n i Q
a i x g n i N
g n a i j n i X
Region
158
National 3,859.3 1,313.2 263.4 801.4 233.6 461.1 366.7 326.0 94.0
Beijing 9,182.2 2,924.3 699.4 1,989.7 473.6 1112.4 950.6 840.6 191.5
Tianjin 4,854.6 1,978.7 365.9 888.3 233.0 467.5 462.3 360.5 98.5
Hebei 3,534.6 1,065.2 250.6 815.9 218.9 464.8 296.1 344.3 78.9
Shanxi 3,395.1 1,124.9 315.8 593.5 173.6 357.7 420.2 328.9 80.4
Inner Mongolia 3,951.2 1,186.2 317.5 731.9 177.4 598.6 374.2 468.0 97.4
Liaoning 4,093.3 1,344.3 369.1 718.7 185.2 449.0 500.3 413.8 112.9
Jilin 3,772.8 1,210.0 309.8 691.6 171.9 368.6 454.1 462.4 104.5
Heilongjiang 4,161.2 1,337.5 387.2 710.3 164.6 455.9 560.7 443.2 101.9
Shanghai 10,044.9 3,642.0 554.1 2,069.5 528.0 1459.5 997.7 584.5 209.7
Jiangsu 6,041.9 2,002.2 350.0 1,159.2 327.6 785.5 908.1 362.3 146.9
Zhejiang 8,677.9 2,833.6 551.3 2,015.6 410.6 1146.0 839.2 709.3 172.3
Anhui 3,541.9 1,215.1 232.1 814.2 231.2 339.0 363.9 264.4 82.1
Fujian 4,994.9 2,100.8 310.1 798.8 292.3 638.1 462.2 251.4 141.2
Jiangxi 3,269.1 1,212.2 174.4 744.2 201.8 331.8 285.2 243.8 75.5
Shandong 4,469.5 1,468.1 304.8 832.5 324.6 649.2 421.9 383.9 84.5
Henan 3,292.0 1,024.3 261.4 722.6 253.8 401.4 250.5 287.8 90.1
Hubei 3,406.1 1,096.3 214.0 802.7 261.7 331.4 288.1 295.2 116.7
Hunan 3,552.7 1,358.2 209.7 691.8 243.4 343.8 315.9 293.6 96.2
Guangdong 4,884.6 2,110.7 215.5 875.4 234.7 637.1 326.5 307.4 177.3
Guangxi 2,783.2 1,044.8 110.5 651.0 192.8 310.3 182.6 229.0 62.3
Hainan 2,803.4 1,151.3 117.4 540.1 135.2 312.5 318.0 138.4 90.5
Chongqing 2,837.1 994.7 224.1 518.1 258.4 281.7 239.0 270.3 50.7
Sichuan 3,121.7 1,122.7 226.6 608.4 239.0 360.7 218.6 276.1 69.6
Gui zhou 2,159.1 637.8 137.5 610.2 135.5 229.7 186.2 178.1 44.2
Yunnan 2,575.9 839.7 160.7 580.6 167.6 337.9 206.5 239.9 43.1
Tibet 2,088.5 782.6 300.9 343.7 180.9 282.4 51.1 71.2 75.8
Shaanxi 3,506.2 1,025.2 237.9 824.0 233.3 336.2 397.6 376.2 75.8
Gansu 2,329.4 712.4 184.2 542.0 146.9 256.7 238.0 203.1 46.1
Qinghai 3,095.5 779.9 252.8 933.5 190.7 369.6 198.5 307.9 62.6
Ningxia 3,446.8 975.4 302.6 776.4 188.1 444.0 241.1 417.9 101.2
Xinjiang 2,838.0 850.1 301.2 625.9 133.9 382.1 170.2 314.7 59.9
Clothing Residence
Household
Facilities,
Articles and
Services
yuan/person
Transport and
Communication
Services
Cultural,
Educational
and
Recreational
Articles and
Services
Medicines
and Medical
Services
Other
Commodities
and Services
Region
Living
Expenditure in
Cash
Food
Living Expenditure in Cash of Chinas Rural Households (by Region)
Quarter I-IV, 2010
159
1
Packaged Water 5,992,858,074
2
Carbonated Soft Drinks 5,899,035,246
3
Yogurt / Yogurt Drink 4,337,058,645
4
Ready to Drink Tea 3,654,108,217
5
Liquid Milk 3,586,872,378
6
Juice 3,503,288,287
7
Edible Oil (Consumer Pack) 2,595,708,027
8
Laundry Detergent 1,803,963,417
9
Instant Noodles 993,114,252
10 Asian Traditional Drink 973,276,402
1
Yogurt / Yogurt Drink 38,410,330
2
Liquid Milk 35,287,542
3
Edible Oil (Consumer Pack) 30,533,973
4
Carbonated Soft Drinks 23,901,725
5
Juice 20,511,028
6
Instant Noodles 20,289,971
7
Shampoo 19,706,172
8
Ready to Drink Tea 19,308,239
9
Infant Milk Formula 17,239,976
10 Laundry Detergent 17,220,555
1
Loose Pack Confectionery 44%
2
Toner 30%
3
Facial Mask 27%
4
Jelly & Pudding 25%
5
Functional Drinks 23%
6
Chocolate - Total 22%
7
Skin Moisturizer 21%
8
Liquid Milk 21%
9
Wet Tissues & Baby Wet Wipes 20%
10 Yogurt / Yogurt Drink 20%
Top 10 Categories in 2010 by Sales Volume (Vol)
Top 10 Categories in 2010 by Sales Value ('000RMB)
Top 10 Categories in 2010 by Growth Rate (vs. YA)
2010 FMCG Top 10 Categories
160
List Of Tabels
Part 1: Insights Into What
Chinese Consumers Buy
Down, But By No Means Out
Chinese Consumer Confidence Index
Ride On The Back Of The Chinese
Dragon Chinese Consumer
Confidence Trend
Rural Confidence Remains Higher
Than Urban
China: The 2nd Largest FMCG Retail
Market In Terms Of Outlet Counts
Across The Asia Pac Region
While FMCG Grocery Trade
Dominates The Landscape, Modern
Trade Productivity Is Twenty Times
Higher
Consumers Are Looking For More
Premium + Mass Products And New
Products In All Geographies
Industry Trends Conflict With
Consumer Desires
The New Growth Opportunities Are
Now The Lower Tier Cities And This
Is Where Retailers Are Investing More
On New Stores
The Leading Chains Have Already
Switched Their Attention And More
Than 60% Of Their Stores Are In City
Tiers 3 To 5
Key Shopper Differences By City Tier
China Is The #1 Market And Will
Continue To Grow
Long Term Growth Will Be Driven By
Developing Inland Provinces
Brand Awareness & Perception
Domestic Brands: Friendly,
Economical & Equally As Fashionable
Advertising Delivers Maximum
Impact In Low Tier Regions
Brand Equity Is A Crucial Component
To Long Term Growth And Success Of
Manufacturers
Those Mentioning Intention To Put
Their Surplus In Savings
The Importance Of Providing Good
Service Is Recognized By Banks
As Evident In Their Core Statement,
However, How to Deliver It Is A
Challenge
The Use Of VIP Banking Increased
Moderately, And Mostly From Tier 1
Cities
Ownership Of Credit Cards
Online Is A Major Channel For Travel
Information
Customers Seek Destination
Information And Other Travelers
Experiences Abroad
Destinations Beyond Hong Kong And
Macao Are Increasingly Popular For
Both Leisure And Business
161
Part 2: Insights Into How
Chinese Consumers Watch
Top 10 Websites During CNY Periods
In 2010 And 2011
TV And Internet Usage During CNY
Eve (2010 Vs 2011)
Online Buzz Around CCTV Gala Show
Performances
Advertising Spending Across Major
CCTV And Provincial Satellite TV
Channels
Advertising On Youku.com
Product Categories Of Advertisers
For YOUKU
Chinas Internet Users Can Be Divided
Into Thee Groups
Information Consumption And
Communication Mature, Product
Consumption Just Starting
Portals
Search
E-commerce
2009-2010 Online Media Market
Share Trend
2010 China Estimated Online Display
Ad Value
2010 China Estimated Online Display
Ad Value Trend
2010 Estimated Online Displayed Ad
Industry Share
2005-2010 China Auto Sales Monthly
Trend
2010 Estimated Online Displayed Ad
Industry Share
2010 Auto Industry Ad Contrastive
Analysis
2010 Auto Makers Online Ad Analysis
2010 Online Displayed Advertisers
Analysis
2010 Top 10 Auto Advertisers
2010 Computer & Electronics
Estimated Ad Value
2010 Computer & Electronic
Products Online Displayed Ad
Analysis
Top 10 Computer/Consumer
Electronics Advertisers
2010 FMCG Estimated Ad Value
2010 Top 10 FMCG Advertisers
2010 FMCG Online Displayed Ad
Category Analysis
2010 FMCG Displayed Advertisers
And Video Advertisers
2010 FMCG Displayed Ad And Video
Ad Campaigns
Top 10 Lists By Type of Online Ad In
2010 Display Ads
Industry Categories Of The Top
Advertisers
Online Video
162
Social Media User Growth Rate In
China
Top 10 Brands By Industry Skincare,
Soft Drinks, Banks
China Online Video User
Development Trend
Online Shopping Consumption
Amount
Online Shopper Amount
Internet And Mobile Data Users In
China
The Mobile Internet Price Plan Of
China-telecom
3G Users In China By Age
The Use Time Of Current Mobile
Factors Considered In Purchasing
Mobile Phone
Types Of Functions Important To
Consumers
Mobile Media Usage In The Past 30
Days Q1, 2010
Part 3: How To Win In China
The Size Of The Prize
Explosive Growth In Urban Demand
When Per Capita Annual Income
Reaches RMB 6,000
Tiers 3 And 4 Have Crossed The
Threshold, Offering a Ready Market
For Modern Goods And Services
Unmet NeedsLower Tiers Account
For 87% Of Population But 64%
Retail Sales
Improving The Present And Investing
In The Future
Financial Products And Commercial
Education Could Offer The Highest
Potential Given Their Strong
Commitment To Savings And
Education
Lifestyle Drivers: Short Term
Indulgence, Try New Things, Upgrade
Fashion, FMCG and Vacations will
be the 3 immediate lifestyle drivers.
Buying a car in the next 3 years tops
the high spend list
Implications: A Vast And Varied
Demand Potential Waits To BeTapped
Straddling The Income Pyramid Is
One Strategy To Follow
Winning Tips For Lower Tiers..
8 Innovation Myths In China
165
About The Nielsen Company
The Nielsen Company (NYSE: NLSN) is a global information and measurement company with leading market
positions in marketing and consumer information, television and other media measurement, online intel-
ligence, mobile measurement, trade shows and related assets. The company has a presence in approximately
100 countries, with headquarters in New York, USA. For more information on The Nielsen Company, visit
www.nielsen.com.

www.nielsen.com
Copyright 2011 The Nielsen Company. All rights reserved. Printed in the USA.
Nielsen and the Nielsen logo are trademarks or registered trademarks of CZT/ACN
Trademarks, L.L.C. Other product and service names are trademarks or registered
trademarks of their respective companies. 11/2920

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Insights and Strategies For Success In 2011

FMCG Sales Value Share

Store Count Share

Source: The Nielsen Company

Ad Efficiency ( Sales / Ad Spending )

In automotive industry, brand equity

Buzz volume for Top 10 discussed programs in CCTV Gala Show

Online Buzz Around CCTV Gala Show Performances

2010 Estimated Online Displayed Ad Industry Share

Estimated dispIayed ad vaIue(000) Estimated ad vaIue[000]

Invest and innovate in building a

particularly by playing the Chinese

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