Show 79 Chinese Consumer Fads

adminwarden

Published Date

Main Topic: Cycling Fad

Hosts: Clyde Warden D'Arcy Caskey

Bike trail sign

Retail fads in Asia are common. It is hard to remember a time when there was not at least one fad sweeping across the retail landscape, and each time, everyone is certain this fad had staying power and deep significance. Some of the fads are plain silly, while others actually seem to be positive developments. This episode is about the sudden growth in the cycling market mainly in Taiwan, but spreading to Singapore, and parts of China.

Some of the fads are silly, like 7-11 Disney character collections, where the little figures were hotly sought and bid up in online auctions. Some of the fads are are eatable, such as the donut fad, or the egg tart fad. Fads in Chinese settings almost always include a large social element, where the fad is consumed in social groups or used to gain face. Fads also often include an investment element, or should I say a get rich fast element? Bowling allies, exotic fish, and Taoist temple items to predict stock market moves. I have seen all these and more. Retail fads are common in Chinese cultural settings. An emphasis on group behavior, doing things together, and public face, mean that fads often incorporate high levels of spending. This fad came together as a health emphasis grew, as well as the never ending push from Giant (the local bicycle manufacturer).

Signs of a fad include the fact that outdoor exercise is generally frowned upon. Sun tans are to be avoided, and is why one can often see Chinese women walking outside with umbrellas deployed, sans rain. Yoga is a parallel fad taking place at the same time, and is more in line with what Chinese women think exercise should be.

The biggest beneficiary of this has been Taiwan's Giant Manufacturing, with domestic sales in Taiwan growing from US$185 million in 2005 to US$300 in 2010. Giant aggressively pushed new store designs to upgrade the brand image and integrate biking into daily life activities in Taiwan. Giant outlets in Taiwan doubled from 1,500 stores in 2008 to over 3,000 stores in 2010. The economic slowdown was blamed for slower growth in 2009, but all three leading brands, Giant, Merida, and Ideal, showed strong sales growth in early 2010. While the three brands are bullish on continued growth opportunities, emphasizing global health and environmental movements, their actions show some concern of getting caught out in a bubble. in 2010, Merida consolidated its store numbers and Giant attempted to focus on existing store upgrades. Giant is looking toward more sustainable markets, such as rental and biking group tours, in an attempt to integrate into lifestyles.

Giant's Stock Price During the Fad

One key to the Taiwan cycle boom is the low numbers of bike ownership. Bicycle ownership in Taiwan is approximately 1.3 per 100 people, compared to 4.4 in Europe, 6.8 in the USA. In China, ownership is 3.1 per 100 people and 9.9 in Japan. Given these numbers, it is clear Taiwan has a large space to grow. After the economic take off of the 1970s, bicycle ownership dropped and was linked more with less modern items. In China, this perspective will also hurt bike ownership, as consumers express aspirations to move beyond traditional items. China, like Taiwan, also suffers from a lack of safe locations to bike and dangerous car traffic. High-end bicycles, as D'Arcy mentioned in the video, are often an opportunity to gain face, showing big brand names and high prices. The clothes, helmets, gloves, etc., all can add on for a niche market with high profit margins, but limited in size and possibly creating a bubble that is unsustainable. Giant is very aware of this, and is trying to balance extending their high-end offerings while pushing education of consumers to buy into the longer term healthy lifestyle. Here is a summary of the market as the fad winds down .

The culture does not emphasize you going off and doing your own thing with a small group.

Listen To The Show (Audio Only):

Length: 30 minutes. Download MP14.51MB (Right click->Save As).

Watch The Show (Video & Audio):

From Taichung, Stephen, James, and Clyde.
Length: 30 minutes. (The sound is in and out due to a lot of wind)

iPod (H.264 fast download 320x240) Download MP4 178.47MB (Right click->Save As).
QuickTime Download MOV 233.77MB (Right click->Save As).
Windows Media Download WMV 356.66MB (Right click->Save As).
High Quality mp4 H.264(640x480) Download high quality mp4 233.71MB (Right click->Save As).

Photos:

View the embedded image gallery online at:
http://ccc.qbook.tv/index.php/shows-mainmenu-61/videocasts-mainmenu-64/201-chineseconsumerfads#sigProGalleria69513b4143

From shop to lifestyle

Bottom Line:

Shortly after the recording of this episode, bicycle sales in Taiwan dropped sharply.
Collective social values make fads easy to spread quickly.
The bicycle fad is in direct opposition to common Chinese cultural values.
Although a fad, a market segment may remain profitable for years.
Giant has benefited from the fad and is trying to create a long-lasting profitable market.
Giant is shifting from simple bicycle shops to an emphasis on lifestyle.

Category: Videocasts