Chinese Consumers

This book is a result of being a witness to the evolution of Chinese consumers from thrifty survivalists to global luxury powerhouses. The book looks at the trends which have been shaping the Chinese consumers and attempts to look ahead and imagine the shape of things to emerge. The book traverses a large territory, from demographic and mega trends, to consumer values, to digital revolution and the unique history of marketing in China. It also describes the key trends in consumption and the development of the luxury market and provides portraits of the key consumer segments.

The Chinese consumer behavior is shaped by many diverse forces. Some of them are cultural and stem from the quintessence of being Chinese. Some of them pertain to the unique history of China—both its political history and the very short marketing history. However, some of these are even more powerful and all-encompassing than these and stem from the broader environment in which China and the Chinese consumers exist today. While there may be several such mega forces with a relevance for shaping the Chinese consumer, this book discusses the nature and the impact of four such mega forces:

However, it is not just the pace of adoption which causes amazement—it is the strength of the embrace and the whole-hearted enthusiasm and pervasiveness of the different ways in which the Chinese have taken to the internet, which inspires awe. The internet, and especially the mobile internet, has entirely transformed all key aspects of the consumers’ lives—entertainment, information, shopping, and social interaction. The social character of the web creates a unique environment, as well as unique consumer state of mind. For brands to get their messages across in this environment is a challenging task and definitely, a very different task than what they have faced so far—and definitely showing TV advertising on the digital platforms is not a good way to do it. The impact is even larger in the retail space. According to China’s National Bureau of Statistics, online retail transactions in the country are larger than the combined online sales of USA and Europe.

In this chapter, I look at a few broad specific segments of Chinese consumers and attempt a general classification of the Chinese consumers, with an objective to look at a few groups which may offer a certain degree of homogeneity of needs and warrant a certain degree of uniformity of approach for developing marketing strategies and tactics. These segments described here are not mutually exclusive and collectively exhaustive. For instance, millennials is a large group, which straddles young couples as well as singles, and is a critical target group for marketing for most brands. Similarly, women consumers are a part of all the other groups. However, women and millennials have been described separately as they have some special characteristics which deserve separate examination. Specifically, this book examines the following consumer groups, and tries to explain their importance and their peculiar characteristics which could be relevant for marketing to them:

In this chapter, I look at certain specific industries which have already reached an exceptional stature in China, and are likely to continue to grow further and offer significant opportunities to companies. The number of such industries is large and it is overambitious to try a comprehensive listing of such industries. The choice is definitely biased by my own perspective, though I have attempted to be as objective as possible. Additionally, I have tried to focus on those industries, for which important factors fueling the growth include some specific features of the Chinese economy or distinctive consumer characteristics.

It is ironic that a country which still calls itself a socialist country (though qualified by “Chinese characteristics”) has turned into a voracious consumer of luxury goods. While rapid economic growth and swelling ranks of the rich are definitely fueling the market, there are also clear cultural and circumstantial factors which make the Chinese more attracted to luxury products than some other markets. The rapid expansion of the internet and its empowering influence is acting as another important catalyst for the luxury market in China. Internet increases the exposure to luxury brands and extends their reach to smaller tier cities, where very few retailers have distribution.

Marketers often debate whether the Chinese have the same fundamental needs as the consumers in the rest of the world. Do they also open their purse strings to the lure of protecting their loved ones, exhibiting their status and the joy of camaraderie? Or is the Chinese consumer a different animal—and is driven by very different needs and desires? Some very erroneous views prevail around the subject—including that the Chinese consumers are not emotional and only go by very tangible product characteristics, or that they are not susceptible to the charm of humor, or that they always display a collectivist tendency making them immune to the glory of individualistic excellence. In this chapter I look into the basic values of the Chinese consumers, which influence all their behaviors, and find some surprising and some predictable insights into their minds.

Marketers sometimes debate whether branding plays the same role in developing markets like China as it does in the developed markets (though some in the same breath contend that China is not a developing market anymore). China is in a relatively unique position here, as it shares some characteristics with the developing markets, but in some ways, it is not only ahead of the curve from developing markets but also leads the developed markets. While it is clear that it is time for marketers to increase their investments, the rather special nature of markets like China indicates that the traditional approaches to brand building will be inadequate. China has not ony eclectively embraced many global brands, but has also successfully developed its own brands in many product fields through clever innovation and mareting investments.

The developed world has a long and rich history of marketing, in which marketing strategy, advertising management, segmentation, and positioning play a central role. Marketers in China have also been rapidly acquiring this marketing knowledge and trying to grow their brands in the country. However, China will go down in history as the country with the briefest exposure to marketing as the world has known marketing so far. At the end of the Cultural Revolution in 1977, there were practically no brands in China, nor were there any consumers with money to buy them. In the 40 years since the opening up of the economy and flourishing of the private sector and market economy, China has transformed itself into one of the most competitive and crowded markets in the world. The hypermarkets (and now the online markets) are heaving with super loaded shelves, and hundreds of television stations, publications, and outdoor billboards and signs are proclaiming the merits of myriads of brands from all over the world. However, the digital age threatens to bring an abrupt end to this 40-year period of conventional marketing in China. China has leapfrogged into the mobile-driven digital age—and now marketers face a huge challenge to take the same leapfrog.

Predicting they say is difficult, especially if it is for the future. All predictions rely on history, deciphering what has happened, sifting long-term trends from short-term blips, and painting a course for the future. Given the fact that China has such a short history of consumption and marketing, and that history is also being re-written by the digital juggernaut, does not really bolster confidence for future predictions—as there are no precedents to learn from the past—either in China or any other country. However, based on an interpretation of historical trends as well as the digital forces sweeping across the Chinese landscape, I am ready to take the risk of extending my neck and making some calls for the future.

In this chapter, I offer more intimate and holistic portraits of Chinese consumers from different segments. The purpose of these portraits is to create a more graphic picture of the consumers, describing their lifestyles, motives, aspirations, and worries. I hope these portraits will create useful and vivid pictures of the consumers, enhance the marketers’ understanding and help in thinking about the possibilities and strategies of marketing to these segments of consumers.