Retail volume of licensed merchandise in China reach USD 12.7 bln

—  China Licensing Industry Report 2019 released

 

By Alice Yang

 

As the fifth largest licensing market in the world, China has great potential to grow more impressively. The market is so big that it is always difficult to see into the details. To understand the rapidly growing licensing industry in China, China Toy and Juvenile Products Association (CTJPA) conducted a professional survey and issued the China Licensing Industry Report 2019 earlier this year. It is the only industrial report in the world that focused on China licensing field. And it is the continuous third year that CTJPA publishes such report.    

 

According to the statistics of the Report, the total retail volume of licensed merchandise in China in 2018 reached USD 12.7 billion, 14.6% growth year-on-year. We will share more of the key factors, discovered by the Report, about this big market.

 

 

Profile of licensors in China

 

According to the Report, 412 licensors (26.0% growth y-o-y) were active in the licensing market of China by the end of 2018. And 1,473 properties (42.7% growth y-o-y) and brands had conducted licensing business in China by the end of 2018.

 

The top three popular properties by category were entertainment (59%), Art& Design (16%), and Lifestyle& Fashion (15%). Also, more and more museums join in licensing business thanks to the government encouragement and the market demand. And museum licensing in China is more recognized as in the category of art licensing. The beautiful merchandises created by museums on the sake of art licensing become trendy and fashionable in China, and more high-end consumers prefer to choose those products to identify their life style. 

 

According to the statistics released from Forbidden City, China’s largest museum, their retail volume of licensed merchandise had surpassed USD 223 million in 2017, and the amount of the licensed merchandise reached over 10 thousand SKUs.  Art licensing in China is raising and promising.

 

Chart 1: Properties by category

 

More popular properties in licensing industry come from foreign countries, taking 69% of the whole market share. US, Japan, South Korea and UK are the top four regions. What is worthy to mention, the properties regions are becoming more diversified than before.

 

Chart 2: Properties by regions

 

After over a decade of development, more and more international companies recognize the potential of Chinese licensing market, and they are more willing to enter and explore China market. At the same time, as the licensing market in China growing, more and more Chinese companies realize the importance of brand licensing, and start to explore more possibilities in the business.

 

Profile of licensees in China

 

Licensee companies in China cover many different industries, from traditional toys and apparel to the emerging theme space. Licensee companies have realized the value of properties and are more willing to invest in the licensing business.

 

Overall Chinese licensees are gathered in 16 main industries. And the top 5 licensee industries are toys (17%), apparel (14%), food& beverage (9%), gifts (7%), and theme space (7%).

 

Chart 3: Licensees by industry category

 

 

The most impressive increase goes to the category of food and beverage, increased from 7% to 9% in the whole category pie in 2018. As the consumption became more competitive in the market, how to get attention from the consumers is a question the manufacturers thinking every day. Brand licensing offered them an ideal way to be spot immediately among all the similar products on the shelf. More licensees in food and beverage start to turn to cooperate with licensors to keep their market share and growth.  

 

Also the theme space remains as a trend in the industry. Theme exhibitions in the shopping mall, theme coffee bars, theme restaurants, theme convenient stores, theme plane and metro… witnessed a booming in recent years. With the theme park, films, co-productions, retail shops, they're creating an ecosystem to bring consumers in and foster a broader buzz and awareness, by theme space licensing together with retail sales.

 

According to the investigation, the Report found there is a good increase of merchandise sales driven by licensing. More than one third companies (36%) admitted that they have gained 20~49% increase in sales because of licensed merchandise.

 

 

Chart 4: Increase of merchandise sales driven by licensing

 

 

 

Consumers’ behavior on licensed merchandise

 

As China’s licensing industry getting more mature and continuously increasing economy, its consumers who earn more money are more willing to spend money on what they want, instead of what they need.

The most welcomed licensed merchandise in the market were apparels (60.4%), toys (55.2%), and consumer electronics (51.4%). 

 

Chart 5: Purchase by licensed merchandise category

 

 

Thanks to the smartphone, online purchase becomes so easy for every Chinese, and online shopping plays a big role in the licensed merchandise purchase too.

 

Chart 6: Purchasing by online channels

 

Also, when asked about the price which consumers willing to pay for licensed merchandise compared with regular products, over 39 percent of the investigated consumers accepted the price within 21-50 percent increase.  

 

Chart 7: Price consumers willing to pay for licensed merchandise compared with regular products

 

 

 

(Data source: China Licensing Industry Report 2019)

 

(About the Author: Licensing Project Manager of China Toy & Juvenile Products Association)