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2018 | Book

Understanding China’s Consumers Read chapter Read first chapter

Made for China

Success Strategies From China’s Business Icons

Author: Christian Nothhaft

Publisher: Springer International Publishing

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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About this book

This book shares unique perspectives on the successful global evolution and future ambitions of Chinese consumer companies. It presents an unprecedented collection of one-on-one interviews with some of the most influential leaders in China, whose companies offer diverse products and services.

Further, the book offers future business leaders encouragement and guidance on how to ride the consumer wave in China. It also investigates some of the foremost current trends, revealing the best opportunities for companies to succeed on the Chinese market. Written by a successful business leader, this book is a timely must-read for anyone seeking to understand Chinese consumers, the Chinese market and what makes Chinese entrepreneurs tick – helping them learn how to do business “Made for China”.

Table of Contents

Frontmatter

China’s Customers and How to Lead the Trend with Them

Frontmatter
1. Understanding China’s Consumers
Abstract
With the rapid evolution of the Chinese consumer market, China’s economic development is catching up fast with the Western standards. Its consumer base is evolving, multi-layered, and has highly differentiated needs. As e-commerce and distribution-building in China are reaching maturity, the next phase of the consumer market in China belongs to the product makers. Such product makers don’t just drive product innovation, but pioneer business model innovation. Interestingly, this change has its roots and support from traditional societal values.
Christian Nothhaft
2. The Leaders Behind the 21 Made-for-China Success Stories
Abstract
In what follows, I present the snapshots of my interviewees for this book, China’s 21 leading entrepreneurs who have developed their companies into top enterprises in their respective industries. Born during the 1950s to the 1970s, they are China’s first-generation entrepreneurs. They have witnessed almost every significant Chinese market development, from the reforms towards openness, to the entry of global companies, and the rise of private enterprises.
Christian Nothhaft

Part II

Frontmatter
3. Inspiring Consumers’ Dreams and Styles: Modern Media
Abstract
This chapter introduces the reader to Modern Media—China’s No.1 lifestyle publisher. Lifestyle publications in China are going digital and offer diversified content as their consumer groups diversify. The industry is opening doors for new entrants and is also supporting existing publishing houses to rejuvenate and increase efficiency. The story on Modern Media depicts how it sets an example in internationalization of content sourcing, trend-spotting, and discovering new revenue models.
Christian Nothhaft
4. Getting that Dream Job: Tarena
Abstract
China is likely to become the largest vocational training market in the world as local companies are pushed to higher professional standards to face the ever-increasing competition for customers. Classroom-based distance learning is seen as a solution for fast-growing companies, as it ensures consistent quality in employee training and provides updated training content that is geared towards market leadership. Here is the journey of China’ No.1 IT training company Tarena, that reflects the zeal of Chinese people for self-development to create a better life.
Christian Nothhaft
5. Diversifying the Product: GreenTree Inn
Abstract
The race for market share and the rise of lifestyle- and brand-conscious consumers is both a challenge and an opportunity for hotel operators. This chapter looks into how the hospitality industry in China is working towards winning and retaining customers. It shows how segmentation, exploration of new services, and advances in technology are used to achieve this goal. We also explore the “hotel room of tomorrow” with the founder of one of China’s largest foreign-invested, locally operated hotel brands, the GreenTree Inn.
Christian Nothhaft
6. Brand to Platform: Daphne
Abstract
The shoe market in China has historically been highly competitive. China’s leading shoe brand, Daphne, is transforming the way it sells. From retail outlets to creating online experiences, and developing trend-leading services, Daphne is setting standards for future. In fact, the ultimate role of China’s shoe manufacturers might be that of “style consultants,” in tune with China’s fast evolving, trendy, and style-crazy new generation.
Christian Nothhaft
7. Boutique Is Beautiful: Grace Vineyard
Abstract
Companies often tend to rely on China’s size and population and are tempted to make “national expansion plans” for the market. The resulting experience is most often costly and leading to failure, as consumer behavior is hard to predict in such a vast market. It is sometimes better to gain a solid reputation and foundation in one region of China before expanding nationally. The leading privately held winery in China, Grace Vineyard, shows how to gain reputation in a niche market with a focus on quality and reliance on local consumers. It also leads the way in connecting to the young customer by its footprints in social media and e-commerce.
Christian Nothhaft
8. High Above the Rest: Toread
Abstract
China’s outdoor market has seen rapid growth in the last years. Outdoors wear has become an expression of status and lifestyle, thus tempting urbanites to wear outdoor fashion even on a daily basis. This chapter illustrates Toread, the No.1 outdoor brand in China, which successfully creates brand awareness through its founder’s extreme mountaineering ambitions, and encourages consumers to explore the world of outdoor fashion and products.
Christian Nothhaft

Part III

Frontmatter
9. Reaching More Households, Offering More Products: Suning
Abstract
For the last 30 years, electrical retailers in China have built large networks and extensive consumer data resources across the market. The current focus is on evolving their business model and building online and offline customer experience ecosystems as well as logistics and microfinance options—all in a race to reach more consumers. This is the story of Suning, China’s No. 1 electrical retailer, extending its reach into households and transcending the boundaries of its current business, its suppliers, and products.
Christian Nothhaft
10. Households Upgrading Appliances: Haier
Abstract
The Chinese white goods market is huge—nearly the same size as the US market—and urbanization is still intensifying. This chapter illustrates how China’s No.1 household appliance brand Haier successfully generates business by entering new markets with a proven core strategy and with specially developed products. It also shows how a large conglomerate like Haier that has been in hyper growth for years attempts to retain customer-centricity and speed of execution. This chapter shows how Haier constantly reassesses its business model and corporate setup to remain agile.
Christian Nothhaft
11. Home-Style Dreams: Kuka
Abstract
China has been increasingly witnessing the trends of cocooning, priority shifts of younger consumers, as well as an influx of “style advice” through social media. The success of companies such as IKEA and rise of possibilities via Internet are helping home decoration companies to evolve as the Chinese customer’s ambitions towards home interiors are reaching higher levels. China’s No. 1 sofa company, Kuka, is transforming from an experienced OEM manufacturer with initial focus on designer sofas to a comprehensive home-style consultant with innovative customer service and brand marketing.
Christian Nothhaft
12. FMCG Premiumization: Liby
Abstract
International Fast-moving Consumer Goods (FMCG) brands experience mixed success in China, with local companies often dominating entire segments. This chapter describes how a Chinese FMCG company has become a market leader, standing tall against global giants. It achieved this by focusing on a CapEx-light distribution model with emphasis on achieving good revenues to distributors, and the right speed to grow a national sales network quickly, thus becoming the market leader. Today, privately held brands of the local giant Liby Group dominate the household detergent category in China.
Christian Nothhaft
13. Medical Care Going Private: BYBO
Abstract
With the service experience in most Chinese hospitals being subpar, opportunities for specialist private clinics have arisen in the recent years. This chapter describes how one of the largest dental clinics in China has built market penetration in the main cities to establish a brand reputation normally seen with first-movers and manages fixed costs effectively. Being a successful alternative to traditional dental clinics in large hospitals in China, BYBO focuses on quality standards, training, and development of dentists to raise the bar in quality dental care.
Christian Nothhaft
14. Protecting Lifestyle and Loved Ones: New China Life Insurance (NCI)
Abstract
To grow a more sustainable customer base, life insurers in China are reinventing themselves, offering a broader and increasingly customized range of insurance products aimed at different concerns. This chapter describes how one of China’s leading insurance companies repositioned itself as a “life partner” by creating new products, innovating sales channels, using big data to segment consumers according to various life stages and needs, and taking a softer and customized approach to building customer relationships and distribution.
Christian Nothhaft

Part IV

Frontmatter
15. Brand Trust: Yili
Abstract
Chinese consumers are increasingly replacing traditional soymilk with cow’s milk. Dairy companies in China are fast evolving in developing diversified milk products and venturing into specialty products such as flavored yogurts and functional drinks to match the tastes of today’s urbanites. Yili, China’s No. 1 dairy company is leading this development to establish multiple brands in different categories while constantly upgrading manufacturing technology and practices, while continuing to ensure product supply not only in China but also overseas.
Christian Nothhaft
16. Supermarket Sophistication: Yonghui
Abstract
The increased competition among supermarkets, and segmentation of shoppers, has created a massive need for innovation in the Chinese supermarket sector. This chapter describes how China’s No. 1 supermarket chain, Yonghui, has set itself apart from the competition through creative new stores and shopping formats (both online and offline), to cater to today’s capricious and diversified consumers. As consumers are highly aware of food safety issues, Yonghui is also consistently developing its sourcing and supply chain capabilities, including introducing new brands and direct imports to China.
Christian Nothhaft
17. Urban Fast Food Formats: Gil Wonton
Abstract
Chinese fast food chains are rapidly evolving, but it’s a tough business. The challenge for companies lies in to the need to constantly improve their core products and store concepts. This is the story of the No. 1 dumpling chain, Gil Wonton, which successfully built a national reputation for hygienic food, innovative recipes, and maintains air-conditioned, branded stores in a highly price competitive market. This chapter brings a first-hand account of the classic challenges in building and maintaining its stores and brand, including the danger of copycats trying to get a piece of the pie from successful entrepreneurs.
Christian Nothhaft
18. Better Booze: Jing Brand
Abstract
Hard liquor producers in China are now under tremendous pressure with two major challenges—a modest drinking culture and the change in government policies. These factors have shifted the market power to the end consumer, who increasingly wants to “drink healthy.” In this challenging environment, China’s No. 1 health liquor, Jing Brand, is able to weather the storm better. It capitalizes on the Chinese traditional belief that herbal- and health liquors have health and medical benefits. Jing brand now focuses on marketing traditional belief to young consumers. This chapter shares this story of Jing Brand.
Christian Nothhaft
19. Turning TCM Classics into FMCGs: Guangzhou Pharma
Abstract
With the increase in emergence of private doctors, the prescription drugs and OTC product sector in China is likely going to grow further, shifting the decision-making power over to the consumer. Guangzhou Pharma is an example of how a pharmaceutical company used its distribution system and customers’ faith in Traditional Chinese Medicine (TCM) to make a Chinese herbal tea into the best-selling soft drink in the country. Traditional Chinese health food and “functional drinks” like Wanglaoji are a potential growth market not only in China but also across the globe.
Christian Nothhaft

Part V

Frontmatter
20. Curious About the World: Ctrip
Abstract
China’s travelers are shaping the future of the global travel market—and will do so for years to come. Large e-commerce and offline agencies have democratized and disrupted the Chinese market by competing for the local consumer. The game is no longer just about travel booking and improving related services. The case here shows how China’s No.1 travel agency and travel operator, Ctrip, recreates customer experience by generating cross-investments inside the travel value chain in an attempt to secure part of lucrative sectors like cruises or specialist travel.
Christian Nothhaft
21. Eater-tainment: Hai Di Lao
Abstract
There is a growing demand for casual dining establishments that appeal to China’s younger consumers. However, the jury is still out as to whether or not foreign casual dining concepts can be successful on a larger scale in China, as the Chinese are fond of their traditional dishes. This chapter illustrates how China’s No. 1 casual dining company, Hai Di Lao, has managed to expand a large footprint restaurant chain, managing challenges like rising labor costs, while developing new products appealing to local tastes and opening stores overseas.
Christian Nothhaft
22. Chinese Hollywood: Wanda
Abstract
Companies in China are now making substantial investments in the entertainment sector: Shopping malls are becoming destinations with attractions beyond shopping; dozens of theme parks are being churned out annually to create local, regional, and even nationwide attractions. Furthermore, the investment into the movie industry is booming. Being the No.1 global cinema owner, the Chinese company “Wanda” is determined to expand its entertainment industry arm by betting on growing its management talent and improving China’s movie production capability in and outside China.
Christian Nothhaft
23. Home Entertainment: TCL
Abstract
Chinese manufacturers are now going through a transformation process challenged by their current market position and encouraged by national policy to rejuvenate and upgrade manufacturing. China’s leading home electronics company, TCL, is strategically focused on converging its traditional entertainment devices with content or services, all in an effort to be customer centric and to evolve as a solution provider rather than remaining as an equipment manufacturer. This chapter also describes the complexity and competition companies face in this evolution.
Christian Nothhaft

Made for China: The Future

Frontmatter
24. Made for China: The Future
Abstract
Customers in China have evolved into a multilayered consumer society with a vast variety of needs. As e-commerce and social media evolve, consumers in China are gradually enjoying transparency on what’s available in the entire world, raising the bar for consumer businesses exponentially. Within a short period, the decision-making power has dramatically shifted to the consumer, who now decides which product, which business excels, and which falters. The end-to-end high-speed distribution capability, favorable pricing, speed to market, and efficient single-boss management are some of the secrets of successful businesses in China. The competitive pressure vis-à-vis a fast evolving market with over 1 billion shoppers keeps Chinese companies evolving, acquiring innovation capabilities and continuing to act very entrepreneurially for years to come.
Christian Nothhaft
Metadata
Title
Made for China
Author
Christian Nothhaft
Copyright Year
2018
Electronic ISBN
978-3-319-61584-4
Print ISBN
978-3-319-61583-7
DOI
https://doi.org/10.1007/978-3-319-61584-4