00:00Shoes, phones, windows to alternate realities. Many of our favorite products are made in China,
00:09but designed elsewhere. Well, that narrative is beginning to change a bit.
00:14Popmart shares rise to a record as the CEO announces a new mini Lububu.
00:21And the game award goes to Black Myth Wu Kong.
00:25What we're seeing now is an emergence of Chinese soft power into the rest of the world.
00:31In the past, China was creating all these low value products, and it's very hard to gain soft power from that.
00:37But as you move up the value chain, the natural byproduct is that your soft power also increases.
00:43We will continue to actually see more of them penetrating into various overseas markets.
00:49As the power of China and the global economy has increased,
00:51it's an opportunity for them to go and invest in these other markets,
00:55similar to the way that American companies probably did in post-war America.
00:59Although no one's saying that's going to be smooth sailing.
01:02A lot of the challenges for Chinese brands, especially in the U.S.,
01:06depends a lot on the political uncertainties that have been unfolding under Donald Trump.
01:11Some are locked out of whole markets, while others have invited a certain kind of rhetoric.
01:16The Chinese government has that data.
01:21So, with Chinese brands seeming to win over global consumers,
01:25could they also help with something much less tangible?
01:35Soft power doesn't get much softer than these fairy little enigmas.
01:40All right, calm down.
01:45These things, they're changing perceptions, one screaming child at a time.
01:50You've got people across the world, across the U.S., on TikTok,
01:54unboxing their labubus, showing off their hauls,
01:57from everyday buyer to a major celebrity like Lisa.
02:01Riding that wave of hype has paid off for the brand behind the world's favourite new furry merchandise.
02:06Popmart had one store when it opened in Beijing about a decade ago.
02:10It's now been able to open across the U.S., not just on the coast,
02:13but in areas of the U.S. heartland like Ohio,
02:16and that shows just how far its reach has gone.
02:19Since 2024, Popmart's annual revenue has more than tripled.
02:24The overall sales grew as much as 250%.
02:27Addressed the thank you card to TikTok, one of China's other major cultural exports.
02:32TikTok is a really popular app in the U.S., and it now ranks among the top five social media apps,
02:38alongside the likes of YouTube, Instagram, Facebook.
02:42The app has over a billion users worldwide,
02:45including over 170 million per month in the U.S. alone.
02:49And it really brought in a whole generation of young Americans
02:53and introduced them to a Chinese brand probably for the first time.
02:57This is a crowd that loves to exclusively browse and buy online,
03:03a habit that's already second nature to most Chinese consumers.
03:07This chart shows the percentage of people who use apps to shop online and make in-store payments.
03:13Compared to the U.S., for instance, where about 40% of all retail payments are made using phones,
03:18Chinese consumers are far ahead.
03:21There has been a generation of Chinese companies that came of age during this mobile-first e-commerce era.
03:29Chinese companies have really had this advantage at home of being able to hone those strategies on these consumers.
03:35And now Chinese companies are bringing that to your morning caffeine.
03:40Luckin became China's biggest coffee brand in 2023, surpassing Starbucks for the first time.
03:47That's in terms of sales revenue, and since then, its lead has only grown.
03:51But it's also true in terms of store numbers.
03:54As of October 2024, Luckin had three times as many stores in China as Starbucks.
04:00In China, it offers drinks for as little as a dollar,
04:03and it's really forced Starbucks to rethink its playbook in the country.
04:07For instance, Luckin customers can only order through a mobile app.
04:11That keeps staff and costs down.
04:14And now Luckin's really bringing that fight to the U.S.
04:17It's opened a number of locations in New York,
04:19and it's introduced a few items for its fall menu that have pumpkin spice in them.
04:24Luckin Coffee is a great example of Chinese companies not only bringing their playbooks to the U.S.,
04:29but now starting to adjust what they're doing to accommodate U.S. tastes.
04:34Another place ripe for expansion is here.
04:41Brazil is very similar to China in a sense that we are seeing growing urban centers.
04:47They also had a shift in their demographic to more middle class, so higher ability to spend.
04:53And more importantly, a good part of that population are a lot younger and more willing to actually embrace some of these digital tools into their daily lives.
05:04The retail apps are some of the largest and most popular now in Brazil, specifically Timu and Xi'an.
05:09And more are looking to join the party.
05:11Meituan, the food delivery business, planning to spend a billion dollars over the next five years to launch Meituan in Brazil.
05:18This came just as President Lula was visiting Beijing and signed a deal to allow more Chinese investment in mining, transport and ports.
05:26You'll find this mix of government backing and business expansion in other places, too.
05:33There is a government push.
05:35They have the backing of Beijing to actually go overseas because China would also like to build its global footprint through its companies.
05:44In part, that's because of pressure at home.
05:47China has been going through factory deflation.
05:50These companies are facing downward pressure on prices because of intense competition.
05:56In order to survive in China, they have to go overseas because that's where they can charge higher prices, get higher profit margins.
06:06One of the biggest challenges that Chinese brands are facing now is, of course, the geopolitical uncertainties.
06:12We're talking about tariffs, investigations going on into certain sectors.
06:17There is increased scrutiny on data privacy.
06:20Take Huawei, for example.
06:22It was blocked from the U.S. over national security concerns.
06:25TikToks faced similar scrutiny, although there has been some softening there.
06:30I like TikTok.
06:31That's why they're saying, are you saving?
06:33We probably will save TikTok.
06:34Keep TikTok!
06:36Keep TikTok!
06:37Efforts to save TikTok is evidence of just how entrenched Chinese brands have become.
06:41And this familiarity could be shaping people's views.
06:45TikTok is popular in youth culture, and a Pew Research Center survey found that people aged 18 to 34 tend to view China more favorably than 35 to 49 year olds, or the 50 plus crowd.
06:58For an average user, I don't think they see it as a Chinese app or a Chinese retailer.
07:05They just think of it as an app.
07:07And that's arguably what soft power is all about.
07:10It's meant to be nebulous and unidentifiable.
07:13But even if it is working, it's a long road.
07:16That same Pew Research data shows most of the countries surveyed still have broadly negative perceptions of China.
07:23So the longevity of Chinese brands may depend more on good business strategy than politics.
07:29There are also a lot of questions about sustainability and whether a company like Popmart that's been able to grow this rapidly is going to be able to carry that forward, or whether it's something that's going to see a bubble that will burst.
07:41Retention has become a big issue for Jian and Timu.
07:44Amazon has 93% retained user rate in the U.S.
07:48Timu is like in the 60% range.
07:50So people are pivoting on and off their app.
07:53Despite challenges, Chinese brands are probably here to stay.
07:57And this adds to the nation's growing global prominence.
08:00We will continue to actually see a world that is incorporating more Chinese products as well as Chinese backed services into their daily lives and into their work with or without them knowing it.
08:16It's a natural transition of the Chinese economy that eventually leads to the cultivation of soft power as well.
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