China E-commerce Weekly: Douyin Approved Visual Characters, Kuaishou's Q1 Financial Report, Fendi x HeyTea Collab

WeChat Pay Launches Palmprints Payment: Is It a Game Changing Innovation or a Stunt?

May 21st, WeChat Pay officially launches palmprints payment solution with the application in Beijing's Daxing International Airport's metro station.

The palmprints scanning is a leading biometric identification technology, sampling user's palmprints & palm vein to recognize individual. Compared to facial recognition, palmprint recognition have higher success rate and better accuracy, which paved its way for large-scale applications.

Tencent owns 10 of 15 public patent of palm recognition technology, and in future the tech giant envisions more usage in restaurant, supermarkets or even hospitals as an extra secure payment method. 

Fendi x HeyTea Collab Attracts 9.9 Million Views on LRB

Italian luxury house Fendi joined forces with the beverage brand Heytea for its latest local release on May 17. On Weibo, Heytea has changed its icon to a yellow-and-black Fendi collaborative logo, a precursor of their collaboration. It’s not the first time the leading tea brand has entered the realm of luxury, having also worked with beauty brands like LVMH-owned Fenty Beauty (2020) and L’Oreal (2018). Across Little Red Book, consumers have posted previews of coasters, reusable cups, and badges. So far on the platform, the hashtag has attracted 9.9 million views.

Little Red Book Boosts Creator Sales by Allowing Cart Function in Posts

On the Eve of June 18th campaign, Little Red Book launched a new function for individuals and bloggers to embed shopping URL on the notes. This meant the platform had further connected creator influence and sales to improve the platform transaction. 

According to data released by Little Red Book, advertising fee accounts for 80% of its gross revenue while the proportion of e-commerce income is only 20%. However, brands are reducing advertising after the pandemic. It is inevitable for Little Red Book to focus on e-commerce for revenue growth and the conversion rate from notes to sales. There are two approaches for brands to seize the opportunity: exclusive product and absolute discount. This promotes the change of the image of Little Red Book from a content community with in-app purchases to bigger e-commerce platform.

Biem.L.Fldkk Revealed Ambitions to Become the Next Chinese Luxury Group

After a month following the acquisition of Cerutti 1881 and Kent Curwen, the Chinese golf garment maker Biem.L.Fldkk revealed its ambition to become Chinese luxury group in an interview with CCTV. 

BLF first went into public 6 years ago, and the stock price outperform industry expectation. Apart from the newly acquired trademarks, the company also owns Carnival De Venise, Biem.L.Fldkk and Biem.L.Fldkk Golf. The brand's offline outets are located mostly in high-end malls and airports – while the company remain asset-light and with a robust cashflow to support the acquisition. 

Alibaba to Spin Off Cloud, Logistics, and Grocery Businesses for IPO

Alibaba Group Holding, the Chinese e-commerce giant, has announced plans to spin off its cloud, logistics, and grocery businesses for separate initial public offerings (IPOs). The company expects its Cloud Intelligence Group to list within the next year and will seek external financing from new strategic investors. Alibaba's Chairman and CEO, Daniel Zhang, stated that this move aims to unlock value from its businesses and allow each entity to optimize its operations independently. 

The logistics arm, Cainiao, and the grocery and fresh foods chain, Hema Fresh (also known as Freshippo), are expected to complete IPOs within the next 12 to 18 months and six to 12 months, respectively. Alibaba's International Digital Commerce Group, which operates Lazada and AliExpress, will explore external capital options to support its growth in the global market. In the first quarter, Alibaba reported a net profit of CNY 23.5 billion (USD 3.4 billion) and a revenue increase of 2 percent to CNY 208.2 billion (USD 30.3 billion) compared to the same period last year.

Kuaishou's Q1 Financial Report Showing Over ¥224 billion E-Commerce Transaction

Kuaishou, a Chinese social media platform, has released its Q1 2023 financial report. The report highlights significant growth in user numbers, with average daily active users reaching 374 million and average monthly active users reaching 654 million. Kuaishou's total revenue in Q1 increased by 19.7% compared to the previous year, surpassing market expectations. The company's online marketing services and e-commerce sectors contributed significantly to its revenue. 

In particular, the e-commerce gross merchandise volume (GMV) in Q1 reached CNY 224.8 billion, with brand self-broadcasting GMV increasing by approximately 70% year-on-year. Kuaishou introduced the "Chuanliu Plan" to enhance the relationship between merchants and influencers, resulting in a GMV increase of over 15% for participating operators. The company also expanded its e-commerce offerings and experienced significant growth in traffic and GMV.

Tencent Q1 Reported Growth Thanks to Video Channel & E-Commerce Ads

Tencent's Q1 2023 financial report reveals a revenue increase of 11% YoY to CNY 149.9 billion, marking two consecutive quarters of double-digit net profit growth and a return to double-digit revenue growth. The report highlights accelerated commercialization of 2B services, the growing importance of Video Channels, and the benefits of interconnectivity. 

Tencent's core businesses experienced growth, with the gaming business seeing a 10.8% YoY increase, the financial technology and enterprise services business achieving a 14% YoY increase, and network advertising revenue growing by 17%. The advertising sector demonstrated strong growth, surpassing expectations and achieving double-digit growth for two consecutive quarters. Video Accounts attracted new advertisers and higher budgets, and Tencent's interconnectivity allowed for increased advertising from e-commerce platforms. The company is also now starting to make subscription charges to WeCom, which is increasingly used by retailers for private domain operations.

MUGLER x HM Series Created Shopping Frenzy and People Lining Up at HM Stores

The long awaited MUGLER x HM series was finally released in recent days and long-awaited Chinese fashion shoppers lining up at H&M stores to buy the limited edition. "It's a rare opportunity to buy luxury products at 1/10 of cost", by some of the shoppers. Some of the shoppers started queueing for the release as early as in mid-night. MUGLER had a splotlight show with Blackpink on this year's Coachella stage, and the topic "Blackpink Coachella" had over 37 million views on Little Red Book.

China Labor Day Vacation Showed Sign of Consumption Recovery

During the Labor Day holiday, Chinese residents' willingness to consume and travel have increased tremendously, and the booming tourism market drove the rapid recovery of both service and commodity consumption, according to the State Administration of Taxation today.

VAT invoice data showed that across the country, sales revenue related to consumption have increased by 24.4% compared to 2022, among which service consumption and commodity consumption increased by 28.7% and 19.5% respectively YoY. Thanks to booming domestic tourism market, accommodation services increased by 52.3% YOY and catering services increased by 32.8% YOY.

Brazilian Shoes Brand Melissa Bets Big in China by Announcing New Brand Ambassador

Brazilian brand Melissa, known for its iconic plastic shoes with patented technology MELFLEXTM, recently announced their new China brand ambassador Rosy Zhao, a new generation actor who has over 77 million followers on Chinese social media platforms. The brand entered JV formed a brand management group Grendene Global Brands earlier this year that are bringing famous Brazilian brands like Melissa, Ipanema, and Rider to the China and U.S. market.

Melissa had been troubled with growth due to the iconic "ballet shoes" had been less than popular these days, and in China the brand is offering a new collection of Possession which is attractive to the Gen Z population in China. The brand has ambitious growth plan in the post-pendamic China market.

Douyin Approves the Use of Virtual Characters in Livestream Campaigns

May 9th, Douyin (Chinese version of Tik Tok) released the community rules for the use of virtual characters in the content creation. According to this new rule, creators are now allowed to use virtual characters in livestream campaigns and will not be banned as being idle in the livestream. However, the platform will need the creators to register the campaign and the showroom will be labeled with tags of AI. Nevertheless, Douyin is the pioneer in the industry that approves the use of AIGC content in livestream, and this opens numerous opportunity for the AIGC technology, and helping smaller merchants to benefit from lower costs. According to Azoya's own analysis, AIGC virtual human are only 1/20 of the cost of supporting a human-backed livestream campaign, while they are able to broadcast on 7/24 basis.

Tmall Beauty Upgrades Strategy for 2023

Tmall Beauty revealed its plan to carry out 3 core strategy upgrades this year: to increase the new product strategy and helping brands to bring predictable growth, creating new trends in technology-backed beauty while fostering the consumption mindset, and developing comprehensive content ecosystem to help merchants combat churning.

According to data of 36kr, in 2022 Tmall Beauty had over 25 brands with gross merchandise value over 1 billion RMB, and 201 brands with GMV higher than 100 million. There are also 186 emerging brands with revenue over 10 million.