What an incredibly popular Lunar New Year’s gift – the Three Squirrels – tells us about China’s economy

February 3, 2014 Leave a comment

What an incredibly popular Lunar New Year’s gift tells us about China’s economy

By Heather Timmons and Jennifer Chiu January 31, 2014

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What an incredibly popular Lunar New Year’s gift – the Three Squirrels – tells us about China’s economy

This year’s top Lunar New Year gift pack on China’s massive e-commerce website Tmall is a “Three Squirrels” brand nut assortment, which has racked up more than 150,000 sales.  A boxed set of seven packs of pecans and hazelnuts, decorated with a cartoon squirrel riding a horse, it weighs nearly 1,700 grams, or almost four pounds.

Aside from a propensity for delicious nuts, what can Three Squirrels tell us about China?

Online entrepreneurship is alive and well in China. Startup Anhui Three Squirrels Electronic Commerce just introduced the Three Squirrels brand online in 2012. Within less than three months, it was a runaway online hit, and it was Tmall’s best nut seller last year. Overall, online gift purchases this New Year are up 48% from last year, according to Yihaodian.

While China’s banking system continues to prop up bloated state companies, to thedetriment of private enterprise, there are other sources of capital out there. In July of last year, Anhui Three Squirrels attracted a $1.5 million investment from US venture firm IDG Capital, followed by another $6 million from Capital Today Group, a Shanghai private equity investor.

Austerity drives aren’t just for the government: An official crackdown on ostentatious government spending has cut sales of everything from baijiu liquor to luxury cars in China this year. Online shopping promotional events like Yihaodian’sNew Year Gourmet Street and Tmall’s Laba New Year Products Festival feature steep discounts for food, beverages and electronics, sometimes as much as 70% off. The Three Squirrels nut pack is reduced from 315 yuan to 159 yuan ($26).

Chinese consumers love the cuteness. Three Squirrels now has 480,000 followers on T-mall, which contributed 87% of its sales last year. That’s largely thanks to the brand’s carefully cultivated “cute” image, which includes referring to customers as “master” and purchases as “adoptions.”

 

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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