I was in the perfect position to observe our target market firsthand. Feeling refreshed to not to be in a crowd of expats, I was mind blown by how much the local scene has developed, mesmerized by the crowd’s energy, dance moves, chic attire, and especially their confidence. In the beginning, I was just interested because the Nengmao store-owner our street team interviewed last week was half-hosting the show and I really wanted to check out his 80′s China retro chic shirts designs.

As I arrived at about half past ten, a Taiwanese band named Go Chic was playing. On vocal was a sassy lady with short blonde hair jumping across the stage trying to hype up the crowd, but I was not too impressed.

Mao was the most packed I’ve ever seen it. Looking around, I wondered where all these trendy types are hiding during day time. It was the most hip/indie Chinese kiddies I have seen gather in one place, (guess I’ve been going to the wrong places…) Many of them were sporting Nengmao clothing, especially a lightning shirt that came free with the first 200 purchased tickets, good marketing strategy…

After a bit of wandering and chatting with strangers I seem to repeatedly encounter on the weekends, it was time to go back in and watch the main act- New Pants from Beijing. At first, it seemed a lot quieter than Go Chic, seducing the audience with a sweet little lullaby called “Being together.”

Then, out of nowhere, the keyboarder took off his bug-eye glasses, put on a Mao cap, and took over the center of stage, channeling a whole new vigorous atmosphere to the crowd. Their eccentric dance moves and rich instrumental sounds were driving the crowd and I was utterly surprised by their incredible performance. In fact, at that point I realized that I was a virgin to local Chinese acts and was astonished by how creative and musically talented Chinese bands could be. It was really refreshing to see such a passionate and energetic crowd, made up of 90% Chinese youngsters, basking in the glory of the lush sounds, rhythmical movements, and vibrant attires.

The fans at the front started mosh pits, a few attempted stage dives, and towards the end some even bravely climbed on stage, dancing madly with the band. It was a very “很HIGH” moment as the Chinese would say.

Finally, after a few encores, fans were satisfied, caught in the moment, and many rushed to the product booths to purchase more Nengmao shirts and other New Pants products. New Pants’ very own singer Peng lei wrote and illustrated one of the books for sell (Peking Monster). Its raw verse, childlike drawings, and imaginative content stand out as a great symbol of Chinese pop culture. When asked his opinion on the future of art in China, he explained,

“The Chinese government recently realized that investing in creative industries is much cheaper than subsidizing oil and coal. So they started to give money to young people to encourage them do the creative projects that might turn profitable. However, in China, the government still puts limitations on those of us who are “too” creative. For example we had some music performances that were shut down by the government because we were doing punk music, which those politicians thought was evil or something. So I would say there is still a long way to go before I can say that China is a country that supports its artists.”

Fortunately, from what we have seen on Friday night, even without the support from the Chinese government, the creative arts and music scene in Shanghai is thriving and doesn’t see a sign of stopping… yet.

Nike: write your headline

As the World Cup fever continues, Nike has made sure to familiarize everyone with its Ad “write the future.” And now Nike takes a step further to introduce an interactive activity “write your headline.” The idea is for football fans to, via Facebook, Twitter, and other websites, write a 55-character headline for one of the best 50 football players. Nike will choose 100 headlines in random and display them on the top of one of the tallest building in Johannesburg through the “world’s largest LED installation ever.” The lucky fans will receive a video replica of what was projected as a gift.

Nike always seems to be a step ahead in breaking out new ideas, publicizing itself, and putting a twist on current trends. Its “interaction” technique for reaching online users both fosters creativity from its target audience without much effort and provokes enthusiasm from potential and existing costumers.

LePhone brand new AD

The Lenovo version of the iPhone – LePhone, has arrived with a new TV commercial. It attempts to depict a minimalist message, just like the “Apple-New Soul“  Ad, which conveys a powerful message through simple visuals and a catchy tune. However, after watching the LePhone commercial, I saw nothing memorable, with poorly designed visuals, the only attraction was the background music by “mainland Jay Chou” – Xu Song, but honestly, there is nothing special to it.

This failed commercial only makes LePhone look like a shanzhai product. So now, despite the quality of the product, people will only think of  Lephone as a shanzhai product.

The Creators Project is a network dedicated to the celebration of creativity and culture across media, and around the world. It is featuring Chinese creatives such as the singer and guitarist of Carsick Cars, and animator Ray Lei, and it is going to end with a big 3-day finale event in Beijing this September. Stay tuned for upcoming events info.

Please see flyer below or click here for more details.

Charm Café is a youth focused creative centre located in Zhongshan Bei Lu, the creative street of Hangzhou. They provide a platform for Chinese artists and designers to present and sell their artwork, as well as regularly hosting offline activities to encourage creative thinking amongst Chinese youth. Some of their main activities include monthly West Lake Idea Mart (DIY Mart) and weekly Charm Café creative class and exhibition. They also help with organizing China Hangzhou Cultural & Creative Industry Expo in every October and China International Cartoon and Animation Festival in every May.

Creative class in Charm Cafe

Shu Chang

Shu Chang is co-founder and manager of Chame café. He is 26 years old and studied Finance at Zhejiang University of Finance and Economics. He used to work for Hunan TV station as a TV host for one year, later he worked at a user generated content website for two years. Since he cannot give up his strong passion for youth cultural as well as design, in September 2009 he decided to start Charm café with the Hangzhou government’s support and investment from his partner. His dream is to promote creative culture and encourage creative thinking by educating Chinese youth and providing a platform for creatives from all around China to share and market their products.

Interview

During our weekend trip to Hangzhou, we sat down with Shu Chang and chatted over a few cups of joe. Here are some highlights from the conversation:

How do you describe the current youth culture in Hangzhou?

There is a phrase called “Hang’ Er Feng” which describes a trend following phenomenon in Hangzhou. A lot of young people are following and copying trends from outside of China, but I think it’s good, we can learn by following and copying, at the end we will discover our own style.
Hangzhou is more conservative than Shanghai in terms of accepting new things since we have a very deep and distinctive culture, but I think right now it’s the time for innovation and development based on our original culture.

What is the future outlook of youth culture in Hangzhou?

I think we will still be in the process of learning and copying within the next 3 to 5 years, but you can see there are more and more creative activities and parties in town amongst local youth. In 5 years, you will see much more youth focused indie brands as well as opinion leaders. Local culture will be the key influence and I think we will have our own and distinctive style by then.

In 2005, she founded After 17, an online magazine dedicated to giving female artists exposure. Then later, 2006 to 2007 she and fellow photographer boyfriend Patrick Tsai launched the acclaimed My Little Dead Dick project, which ended just before their break up. Her works have since been shown internationally — in galleries and events like France’s Hyeres Photography Festival — as well as frequently appear in publications. She was recently featured alongside photographers like Tim Barber and Peter Sutherland in Shoot: Photography of the Moment.

Be sure to check out her website.

As a reporter and editor, writing was my main form of expression, but I was always interested in more visual creations. Eventually I surrounded myself with several photographer friends. We spent tons of time together, and eventually decided to launch a creative magazine together. Working with them on the mag I started to learn photography and never stopped.

Where did you go from there?

At first photography was just a hobby, but eventually I started shooting for magazines, then brands, and so on. I’m still not accustomed to being a “professional photographer.” I enjoy being involved in many things, so pigeon-holing myself as just a photographer actually goes against what I believe.

What influences your photography, and how does photography influence you?

My photos relate to my personal life. You look at my photos, you’re looking at me. You see the changes in life; the ups and downs. I take fewer pictures when I am bored. I don’t enjoy going out and looking for subjects; I prefer focusing on the people and things around me. But now that I’ve become a freelancer, projects have forced me to get in touch with the people and things that are not related to my life. It’s interesting.

How do the post-80′s generation of “indie” Chinese photographers differ form their predecessors?

Younger Chinese photographers come from a different background, and focus on different themes than past generations. Look at their photographs, and you’ll see much more youth themes. They document their lives and surrounding sub-cultures. It’s much more about us, our personal spaces.

Do you see any notable differences between the emerging Chinese school of indie photographers and their foreign counterparts?

The way I see it, European photographers focus more on ideas and concepts. Meanwhile American photographers are doing great things in fashion, documentary, and “snap shot” photography. You can see the differences in people’s mindset and lifestyles in their photos. Foreign photographers can be simple and direct with their images, meanwhile that goes against the Chinese culture. We’re not simple and direct. Chinese photographers will incorporate seemingly arbitrary elements in pictures.

For those of you still new to Weibo, it’s Sina’s Twitter-like, micro-blogging platform that allows Chinese users to type up to 140 characters and disseminate the information onto the interwebs. (The name Weibo or in Chinese, 微博 translates to “micro-blog,” however its pronunciation is the same as 围脖  or “scarf” in English. The “scarf” translation is the “Weibo” of choice for young Chinese netizens.) It is truly an online force to reckon with. It’s usage is blossoming both online and on mobile platforms. It’s also a great way to keep an instant pulse on Chinese netizens and cultural youth topics. Thus, we’ve set our top Chinese voice, Beibei, into the rapid-fire Sina Weibo world to capture hot Weibo topics and to provide an enovate Chinese voice in this youth dominated platform.

With no further ado, we bring you enovate’s Weekly Weibo Roundup.

1. No Land, No Game!

Not getting any attention from the fairer sex? Buy some property! According to a survey titled The Effect of High Price Property on Single Youths in Guangzhou, only 10% of men cared if a girl had property; meanwhile, 67% of female respondents stated they’d only date guys who either had property, or could afford to buy property. Seeing as Guangzhou’s real estate market prices hit record highs throughout 2009, I offer my sincerest condolences to Guangzhou’s millions of bachelors.

Some have taken the hint, like this Shanghai resident whose vanity has earned him 5 minutes of cyber-fame. He has taken to the web to flaunt multiple properties and calling all guys who can’t afford a similar lifestyle losers.

2. A Lifetime in 90 seconds – a successful viral video from John Lewis

John Lewis’s latest commerical (below) is becoming a hit with Chinese netizens. It artfully and seamlessly chronicles the entire life of a woman in 90 seconds. Since being picked up by the Weibo community, it’s been “Weiboed”  well over 2000 times with positive comments such as “very creative” and “very touching.” Since the video’s release, sales have gone up an astounding 40%. Not too shabby, but I suppose that’s what you’d hope for when dropping an estimated £6 million on producing the commercial. We all think this deserves a tip of the hat. Well done John Lewis.

3. Guangzhou’s Communist Youth League Digs at Generational Differences

Seems like Guangzhou has been busy monitoring its youth lately. Real estate and dating aside, another popular Guangzhou survey has been making its rounds on Weibo. Guangzhou’s Communist Youth League released a report detailing generational differences between those born in the 70′s, 80′s, and 90′s. We’re not sure how necessary surveys were in coming to these general conclusions, but nevertheless, here are some “key findings” that have received the most attention on Weibo:

70′s Generation: workaholics

80′s Generation: celebrate divorce as regularly as marriage

90′s Generation: first kiss in middle school, but want to keep their “first time” for their wedding night.

4. In case you didn’t know…

And just so you know Weibo users have an affinity for humor and design, I bring you one of the most popular images circulating around Weibo these last couple days. They’re by Brazilian designer / illustrator Sergio Bergocce.

5. Nike keeps the buzz going

Nike sure does know how to create a buzz. Their classic line, Nike Sportswear, has a RenRen page boasting over 70,000 friends. In order to leverage and engage this massive community, they’ve teamed NikeiD up with RenRen.com to bring a “creative” feature where RenRen users can flex their creative muscles using some Nike high tops as virtual canvases. Weibo users have been quick to show off their designs to the world. Check out other designs on Nike’s RenRen page, here.

Pacific Epoch retail analyst Marie Jiang caught up with Tor Petersen, the CEO and Founder of Eno, a creative lifestyle fashion brand that targets 18-24-year-old Chinese customers with its innovative designs. Petersen is the co-founder of Zou Marketing, China’s premier sports marketing agency, and previously worked at both NIKE (NYSE:NKE) and Coca-Cola (NYSE:KO) doing China manufacturing, operations, marketing, sports marketing and Asia-Pacific branding.

Why did you choose to leave your previous positions, as a professional manager in Nike and Coca-Cola, and go out on your own as an entrepreneur?

When I joined Nike in China in 1990, they were in the process of setting up their business infrastructure and were much smaller than they are today. I enjoyed the process of building the ship and solving problems during the early stages of the business. When I eventually decided to start my own business it just felt like the right thing to do.

“Eno” – the brand is “One” in reverse. Can you tell us more about the origin of the name?

Exactly, eno is “one” spelled backwards. We felt that the word eno could reflect the dual meaning of “one”. “One” can mean one individual (a focus on individualism) or one group (a focus on collectivism). We think this concept accurately reflects the character of Chinese youth today. Chinese youth crave individualism, but can’t live without a group. “One” is so commonly used across sectors as a slogan that the law actually prohibited us from registering it as a trademark; that’s one reason we chose “Eno.”

How do you see Eno’s position in the future?

I believe that casual fashion will be the fastest growing apparel sector in China over the next few years. Nike entered China in 1985, and the sports market began to develop in the early ’90s. Fashion has lagged far behind the sports sector, with brands like H&M, Zara, Vans and others beginning to enter China only in the last few years. Even though new brands like H&M, Zara, Uniqlo, Vans, Quiksilver and others have partially filled up the vacancy in the market, China still doesn’t have many youth fashion brands, and both retailers and consumers are demanding that they have access to more choice in this sector. We believe that Eno is well-positioned to expand as the overall casual fashion sector grows as a percent of the apparel market in China.

Do you agree that one of Eno’s main characteristics is originality?

Yes, the Eno brand is characterized by originality. We started the brand to tap into China’s growing music, arts, fashion and extreme sports culture, and keep the brand rooted in these worlds in order to build the brand culture and identity. However, we don’t want to be a niche brand targeting a niche market. We are scaling the brand nationally, and position the brand to be a commercial success, while maintaining our creative base. In the next few years, Eno will mature its current design to target a larger audience, beyond just 18- to 24-year-olds.

Who are your target consumers? What sets them apart?

Our target consumers, China youth, share one common characteristic: individualism. China’s one-child policy has made this group comparatively individualistic and given them their own point of view from which to understand the world. This generation has more access to information through the internet and is more exposed to the outside world than their parents, who suffered to some degree from the Cultural Revolution.

Moreover, the younger consumers are, the more communicative they are with the rest of the world. Generations born in the ’80s, ’90s and especially the ’00s communicate with people around the globe without any prejudice. These are the consumers that Eno seeks to target.
Young Chinese consumers are evolving all the time. How do you catch trends?

We paid special attention to design even in the brand’s initial stages. Other brands start with distribution and only begin to emphasize design once they have a nationwide sales network in place, but I believe that good design is indispensable for a fashion brand preparing to go nationwide.

In order to predict new trends, we first employ a group of young designers, who live in the same culture and have the same tastes as Eno’s target consumers. Second, we look closely at the global trends that impact Chinese fashion. The Chinese fashion market is unique. Styles from Korea, Japan, Taiwan, Hong Kong and Europe have an overwhelming influence; there are some styles that become outdated in other markets but will remain popular in China, while some fashion styles become popular quite quickly in China, but fade fast. Eno watches global fashion trends closely and determines which trends are most attractive to youth in China.

What characteristic do you value most for your designers?

For an Eno designer, the most important thing is the thought process behind the design. Many designers in China view design as simply completing a task, whereas Eno designers should first learn how to conceptualize their ideas before designing a product.

How many points of sale does Eno have now, and in which cities? What is your expansion plan?

Eno currently has more than 40 points of sale in China, including cities such as: Shanghai, Tianjin, Beijing, Chengdu, Chongqing, Nanjing, Hangzhou, Ningbo, Harbin, Shenyang and Changchun. We are focused on expanding our presence into second and third tier cities via a franchise/retail operator model. We expect to open 50 new franchise stores in 2010, and plan to have more than 600 stores across China by 2013.

Which cities have the fastest growth? Eno doesn’t have many locations in southern China. Do you have plans to enter markets like Guangzhou?

We’ve found that our northern district is growing the fastest, while eastern China ranks second. For this reason, our team has created specific designs that cater to northern people’s figures and tastes. As for the south, markets like Guangzhou are hypercompetitive and heavily influenced by Hong Kong. Eno plans to first focus on high growth areas in China such as the North region, East region and certain fast growing cities in the West such as Chengdu and Chongqing, and then focus on entering the south region with the support of a strong presence throughout China.

What are the biggest challenges to Eno’s development?

The most challenging thing for Eno has been establishing our distribution network. As China’s retail market is largely single brand led, there are not many multi-brand retailers for our products. In order to scale the brand, we have had to build a single brand franchise network, which requires a full range of products to fill out a store, a unique and well-executed retail format and product that is tailored to the local market. Entering the China market is difficult for any brand, but as a start up with limited resources, building a distribution channel can take time, as the market is highly fragmented and regionalized. Although building our distribution network was a challenge when we started the company, now that our retail format is established and we have built a strong sales team, the single brand retail format will allow us to rapidly scale the brand across China.

We were honored to have Sonnet (十四行詩), Momo, Little Nature (小自然), Pinkberry, Yin (印), DJ Yen and DJ Fish to play for us live, and also Connie, Liz, Nino, Kelvin, Left, Cola, and Chris to show us live illustration. It’s always great when young artists give us a fresh dose of creativity and inspiration. eno has been and always will be standing behind the China’s young creative forces.

Here were some of the highlights:

The Beer Market: Consolidation and Competition

Unlike the US market for beer, which has been steadily dropping in prominence over the last 5 years, China’s beer market stands as the world’s most lively.

China is now the world’s largest producer and consumer of beer. China’s Snow Beer is now the world’s largest brewer by volume and the market share leader in China. Tsingtao is a close second and is rapidly innovating its product line up. Yanjing, a local producer, is third. SABmiller and ABinBEV are in the hot pursuit with their foreign brands, domestic purchases and controlling stakes in other breweries. (SABmiller owns 49% of Snow).

But there are over 300 beer producers in China! While the heavy hitters listed above control more than 60% of the entire market, small local producers continue to dominate away from China’s Tier 1 and Tier 2 cities.

Enter consolidation. As beer’s biggest players continue to eye the China market, they will look to buy up these smaller producers and increase their reach deeper across China. Awhile back, Harbin Brewery and Sedrin were gobbled up by what is now ABinBev.

If consolidation is one key trend to watch, increasing competition is certainly the second most important trend. While China’s beer market may wow potential investors with its size, this is a hard place to succeed. China’s beer is cheap. As one industry expert explained, a keg of Snow sells for about US$ 35. But most of that value is from the steel in the keg. The liquid inside, the actual beer, composes only a tiny fraction of the cost of the filled keg. Snow thrives off its volumes and must be the biggest in the world in order to survive with its razor thin margins. Budweiser, considered a premium brand, sells for about 1 USD. Again, small margins.

With these thin profits, beer companies have to be creative to differentiate themselves, attract new customers and convince people to spend a little more and avoid the cheap bottles on the shelf.

Two examples of this trend are Carlsberg and Suntory. Both are clearly targeting the younger generations in an attempt to bring in new drinkers with a more premium product.

Carlsberg’s campaigns attempt to speak to China’s post 80s generation with their overt displays of attitude and cool. Suntory, with its Mix flavored drinks, is trying to convince China’s female population, a segment not too keen to drink bitter and calorie rich beer, to try their new fruity creations. Many other brands are sponsporing music concerts and younger events to try to attract these drinkers. (China’s official drinkage age is 18.)

These are pretty smart strategies. As our internal research demonstrates, China’s younger drinkers prefer beer. Of course, beer is also incredibly cheap and always available in this segment’s favorite locations: Karaoke joints, restaurants and streetside eateries and clubs.

As consolidation takes over China and competition heats up, enoVate will surely be here to deliver insights and strategy for all of you interested in China’s beer.

China’s Wine and Spirits: “The Budding Yuppie Phase”

While China’s beer market faces a future of intense consolidation and competition, the spirits market in China is, in the words of one industry expert, in the Budding Yuppie Phase.

This contact was referring to alcohol consumption in China’s Tier 1 and Tier 2 cities and the drinking habits of China’s middle and upper class citizens in these cities. While even premium beers (excluding imports) remain relatively cheap in China, the wine and spirits market is in a completely different phase.

“Budding,” refers to the almost adolescent stage of growth in the market. Wines, vodkas, whiskeys, rums, etc are all rather new to China. Only recently have Chinese in big cities started to consume these products but their consumption has skyrocketed in the last few years and will continue to grow.

By yuppie, we refer to consumers’ tastes for brands. Consumers are not yet “mature” and concerned with finding eccentric niche brands. Chinese consumers are not looking to locate a Pinot Noir to convince their friends of their knowledge of wine. Instead, many Chinese are just looking for well-known international wine and spirits brands and buying them to display their wealth. After all, as many who have experienced long Chinese banquets know, those bottles of French wine aren’t for appreciation. Many times they will just be chugged alongside Baijiu and beer.

Chinese consumers are buying Scotch in such large quantities that they even caused a supply scare last year. Research suggests that Chinese consumers are doing so because Scotch is world renowned and perceived as a symbol of status. The most famous premium vodkas also do well in China because of their brand awareness.

Have you strolled around Shanghai or Beijing recently?

If so, you would notice the explosion in wines.  Chinese consumers in tier 1 cities are buying up all the foreign wines they can. Again, most consumers want to display their wealth or impress guests, friends or coworkers. Tea is meant for appreciation, not wine.

We are not neglecting the importance of China’s domestic wines. Baijiu will of course, still be an important drink for banquets and business. Other Chinese wines (huangjiu, etc) will also continue to be consumed at family gatherings, at restaurants and at the dinner table. We at enoVate are not ignoring these products, we only worry that their brands are losing their resonance with China’s youth and thus may have a hard future in a saturated market.

We at enoVate thoroughly enjoyed our time analyzing the alcohol market. Should you need any of your own tailor help within this industry, contact us at matt@enovatechina.com.