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Understanding Chinese Consumers

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China is currently the target of various market-research and ad campaigns by global brands. While a number of foreign companies have already made headway, many still fumble in their attempt to please the Chinese.

The billion-dollar question is “What’s important to the Chinese consumer?

Millions of Chinese are currently enjoying better standards of living and higher disposable incomes. Many can now afford not just basic necessities, but also high-end luxuries.

Compared to living in the Mao Zedong regime, the Chinese now have limitless product choices to match the higher purchasing power that became theirs ever since the country’s market reforms in 1978.

Before embarking on intensive marketing campaigns, companies who’ve done their homework will usually classify their market according to age. The Journal of Consumer Marketing says as much.

Older consumers (Chinese age 35 and over) experienced Mao’s socialist regime, having basic necessities rationed, and stretching limited spending capacity. With the many market choices today, this group spends not just for necessity but also for pleasure. They want the product they buy to be of good quality. They generally think “expensive is good” and value extensive product information.

Younger consumers (under age 35), on the other hand, grew up under Deng Xiaoping’s economic reforms and Open Door policy. They are fond of modern, Western images and brands. They prefer affordable products and desire value for money.

The difference between old and young Chinese consumers is notable in their tastes and preferences. An older consumer would eat a burger “for nutrition;” a younger one, for its taste. Older Chinese will generally

not mind spending more on healthy food, while Chinese teens “eat at Pizza Hut to be seen.”

While age is an important factor in analyzing Chinese consumers, culture still influences buying behavior. Compared to the Western culture of individualism, Chinese society is more communal. So the tendency is to focus more on developing the social self rather than the private self.

The emphasis on “face” or mianzhi, which means reputation or prestige, is reflected in the love for luxury of some well-off Chinese. When buying luxury items, they prefer famous, branded goods, usually Western signature labels.

They buy expensive jewelry, high-priced watches, and designer clothes and shoes to show off their financial success and social status. They link expensive prices to high-quality items and often consider locally manufactured items bearing Chinese brands as cheap and inferior.

Brand loyalty is another important factor. Chinese consumers are averse to risk and very hesitant to accept new products. Once the brand image is established, they are more loyal to the brand than Westerners are.

Also, the emphasis on the communal tradition and group orientation must be considered. The Chinese nature of social interaction affects buying behavior and attitudes toward products and brands. There exists an “everybody does it” mindset and a high regard for social conformity. Thus, word of mouth is an effective marketing strategy in China.

A Chinese consumer would read an ad to get information, but the need to conform with friends or peers will seal the decision to buy.

What’s in a Chinese name?
Chinese consumers generally prefer brand names that evoke images of prosperity, strength, and the good things in life. A product without a good Chinese name will not appeal to them. The famous labels Chinese consumers favor have upbeat brand names with positive meanings.

Mercedez Benz’ Chinese name, for instance, is ben chi. It sounds like “Benz” but at the same time connotes “running fast.”

Coca Cola’s successful Chinese moniker ke kou ke le means “letting the mouth be happy.”

San Miguel Beer has maintained its popularity among Chinese consumers with its Chinese name shengli, which means “power of life.”

Foreign companies planning to establish long- term advertising campaigns in China often find it useful to hire famous local celebrities to draw the interest of Chinese consumers. However, the power of word-of- mouth endorsement cannot be denied. A Chinese consumer would often ask advice from friends to check whether the experience of the commercial endorser is indeed real.

Noteworthy Nuances
The need to be informed is another distinct characteristic of the Chinese consumer. They want product information right beside the product. According to a study published in the Harvard Business Review, they take the time “to window shop and browse on weekends, follow those who try new products, compare items in at least three stores.”

But while store sales are surefire crowd drawers, reducing prices over extended periods tends to make Chinese consumers think that the store is ridding itself “of inventory that is below average in quality.”

The biggest mistake that a company selling in China could make is assuming a homogeneous market. The Chinese consumer market is as diverse as it is huge. As consumers are increasingly exposed to wider product choices, their tastes and purchasing behavior continually change.

Companies wanting to gain a lion’s share of the market and maintain their stronghold will, therefore, have to perform continuous market research and surveys on local consumers.

print ed: 03/08


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