What Chinese Consumers Want Posted: 05/27/2012 3:45 pm by

New Post Public Reply Private Reply Replies (0) Message Board
Stock Buff

What Chinese Consumers Want

Posted: 05/27/2012 3:45 pm by Tom Doctoroff

Apple has taken China by storm. A Starbucks can be found on practically every major street corner in coastal cities and beyond. From Nike to Buick to Siemens, Chinese consumers actively prefer Western brands over their domestic competitors. The rise of microbloggers, the popularity of rock bands with names like Hutong Fist and Catcher in the Rye, and even the newfound popularity of Christmas all seem to point toward a growing Westernization.

But don't be deceived by appearances. In my new book, What Chinese Want , I argue consumers in China aren't becoming "Western." They are increasingly modern and international, but they remain distinctly Chinese. If I've learned anything from my 20 years working as an advertising executive in China, it is that successful Western brands craft their message here to be "global," not "foreign" -- so that they can become vessels of Chinese culture.

Understanding China's consumer culture is a good starting point for understanding the nation itself, as it races toward superpower status. Though the country's economy and society are evolving rapidly, the underlying cultural blueprint has remained more or less constant for thousands of years. China is a Confucian society, a quixotic combination of top-down patriarchy and bottom-up social mobility. Citizens are driven by an ever-present conflict between standing out and fitting in, between ambition and regimentation. In Chinese society, individuals have no identity apart from obligations to, and acknowledgment by, others. The clan and nation are the eternal pillars of identity. Western individualism -- the idea of defining oneself independent of society -- doesn't exist.

Various youth subtribes intermittently bubble to the surface -- see the recent rise of "vegetable males" (Chinese metrosexuals) and "Taobao maniacs" (aficionados of the auction website Taobao). But self-expression is generally frowned upon, and societal acknowledgment is still tantamount to success. Liberal arts majors are considered inferior to graduates with engineering or accounting degrees. Few dare to see a psychologist for fear of losing "face" -- the respect or deference of others -- or being branded sick. Failure to have a child is a grave disappointment.

The speed with which China's citizens have embraced all things digital is one sign that things are in motion in the country. But e-commerce, which has changed the balance of power between retailers and consumers, didn't take off until the Chinese need for reassurance was satisfied. Even when transactions are arranged online, most purchases are completed in person, with shoppers examining the product and handing over their cash offline.

Even digital self-expression needs to be safe, cloaked in anonymity. Social networking sites such as Sina Weibo (a Chinese version of Twitter), Renren and Kaixing Wang (Chinese versions of Facebook) have exploded. But users hide behind avatars and pseudonyms. A survey conducted by the advertising firm JWT, where I work, and IAC, the Internet holding company, found that less than a third of young Americans agreed with the statement "I feel free to do and say things [online] I wouldn't do or say offline," and 41% disagreed. Among Chinese respondents, 73% agreed, and just 9% disagreed.

Chinese at all socioeconomic levels try to "win" -- that is, climb the ladder of success -- while working within the system, not against it. In Chinese consumer culture, there is a constant tension between self-protection and displaying status. This struggle explains the existence of two seemingly conflicting lines of development. On the one hand, we see stratospheric savings rates, extreme price sensitivity and aversion to credit card interest payments. On the other, there is the Chinese fixation with luxury goods and a willingness to pay as much as 120% of one's yearly income for a car.

Every day, the Chinese confront shredded social safety nets, a lack of institutions that protect individual wealth, contaminated food products and myriad other risks to home and health. The instinct of consumers to project status through material display is counterbalanced by conservative buying behavior. Protective benefits are the primary consideration for consumers. Even high-end paints must establish their lack of toxicity before touting the virtues of colorful self-expression. Safety is a big concern for all car buyers, at either end of the price spectrum.

To win a following among Chinese buyers, brands have to follow three rules. First and most important, products that are consumed in public, directly or indirectly, command huge price premiums relative to goods used in private. The leading mobile phone brands are international. The leading household appliance brands, by contrast, are cheaply priced domestic makers such as TCL, Changhong and Little Swan. According to a study by the U.K.-based retailer B&Q, the average middle-class Chinese spends only $15,000 to fit out a completely bare 1,000-square-foot apartment.

Luxury items are desired more as status investments than for their inherent beauty or craftsmanship. The Chinese are now the world's most avid luxury shoppers, at least if trips abroad to cities like Hong Kong and Paris are taken into account. According to Global Refund, a company specializing in tax-free shopping for tourists, the Chinese account for 15% of all luxury items purchased in France but less than 2% of its visitors.

Public display is also a critical consideration in how global brands are repositioning themselves to attract Chinese consumers. Despite China's tea culture, Starbucks successfully established itself as a public venue in which professional tribes gather to proclaim their affiliation with the new-generation elite. Both Pizza Hut and Häagen Dazs have built mega-franchises in China rooted in out-of-home consumption. (The $5 carton of vanilla to be eaten at home is a tough sell in China.)

The second rule is that the benefits of a product should be external, not internal. Even for luxury goods, celebrating individualism -- with familiar Western notions like "what I want" and "how I feel" -- doesn't work in China. Automobiles need to make a statement about a man on his way up. BMW, for example, has successfully fused its global slogan of the "ultimate driving machine" with a Chinese-style declaration of ambition.

Sometimes the difference between internal versus external payoffs can be quite subtle. Spas and resorts do better when they promise not only relaxation but also recharged batteries. Infant formulas must promote intelligence, not happiness. Kids aren't taken to Pizza Hut so that they can enjoy pizza; they are rewarded with academic "triumph feasts." Beauty products must help a woman "move forward." Even beer must do something. In Western countries, letting the good times roll is enough; in China, pilsner must bring people together, reinforce trust and promote mutual financial gain.

Emotional payoffs must be practical, even in matters of the heart. Valentine's Day is almost as dear to the Chinese as the Lunar New Year, but they view it primarily as an opportunity for men to demonstrate their worthiness and commitment. In the U.S., De Beers' slogan, "A Diamond is Forever," glorifies eternal romance. In China, the same tagline connotes obligation, a familial covenant -- rock solid, like the stone itself.

The last rule for positioning a brand in China is that products must address the need to navigate the crosscurrents of ambition and regimentation, of standing out while fitting in. Men want to succeed without violating the rules of the game, which is why wealthier individuals prefer Audis or BMWs over flashy Maseratis.

Luxury buyers want to demonstrate mastery of the system while remaining understated, hence the appeal of Mont Blanc's six-point logo or Bottega Veneta's signature cross weave--both conspicuously discreet. Young consumers want both stylishness and acceptance, so they opt for more conventionally hip fashion brands like Converse and Uniqlo.

Chinese parents are drawn to brands promising "stealthy learning" for their children: intellectual development masked as fun. Disney will succeed more as an educational franchise -- its English learning centers are going gangbusters -- than as a theme park. McDonald's restaurants, temples of childhood delight in the West, have morphed into scholastic playgrounds in China: Happy Meals include collectible Snoopy figurines wearing costumes from around the world, while the McDonald's website, hosted by Professor Ronald, offers Happy Courses for multiplication. Skippy peanut butter combines "delicious peanut taste" and "intelligent sandwich preparation."

Even China's love affair with Christmas -- with big holiday sales and ubiquitous seasonal music, even in Communist Party buildings -- advances a distinctly Chinese agenda. Santa is a symbol of progress; he represents the country's growing comfort with a new global order, one into which it is determined to assimilate, without sacrificing the national interest. The holiday has become a way to project status in a culture in which individual identity is inextricably linked to external validation.

The American dream -- wealth that culminates in freedom -- is intoxicating for the Chinese. But whereas Americans dream of "independence," Chinese crave "control" of their own destiny and command over the vagaries of daily life. Material similarities between Chinese and Americans mask fundamentally different emotional impulses. If Western brands can learn to meet China's worldview on its own terms, perhaps the West as a whole can too.

This post was originally published in the Wall Street Journal. It is an overview of my new book What Chinese Want: Culture, Communism and China's Modern Consumer , published by Palgrave Macmillan.

http://www.huffingtonpost.com/tom-doctoroff/c...f=business

Scroll down for more posts ▼

Top 10 Most Recent News Articles

CIC Services Unleashes PortfolioVantage for Property Owners

Updated Category News Views 3

Eyeing Profit in Tenant Liability Insurance CIC Services has cooked up something intriguing for property owners: a shot at fatter profits through their PortfolioVantage program. Launching now, this tenant legal liability strategy promises more than just basic tenant coverage—it's a potential financial boon for savvy landlords willing to dive in. The Gist of...

Continue Reading
Acer's New Monitors: ePaper, Triple Displays & More

Updated Category News Views 6

Next-Gen Screens: Breakthrough or Bust? So, Acer’s stepping up its game, unveiling an armory of gadgets designed to cement their spot in the tech arena. On the menu today? ePaper displays and enhanced connectivity gizmos that could either tip the scales or sink like a stone. Keep your eyes peeled, though—these updates aren't just another throwaway press release....

Continue Reading
CME Group Unveils 23rd University Trading Challenge

Updated Category News Views 3

An Invitation to Aspiring Traders Around the Globe In the land of trading, where fortunes rise and fall quicker than you can click a mouse, CME Group is setting the stage for the next batch of financial wizards. This year marks the 23rd round of their University Trading Challenge, a veritable boot camp for young aspirants looking to hone their skills in the high-stakes...

Continue Reading
Evotec and Plectonic Join Forces on Tumor Immunotherapy

Updated Category News Views 4

Collaboration Spotlight: A New Horizon for Tumor Treatments Ever wonder why curing solid tumors has been such a tough nut to crack? Evotec SE (NASDAQ: EVO) and Plectonic Biotech are wagering that their collaboration might just hold the key to unlocking new answers. They’re pooling their cutting-edge tech to take a fresh swing at this stubborn problem. Here’s what’s...

Continue Reading
Father's Bone Marrow Gift Transforms Daughter's Future

Updated Category News Views 1

When Hope Hinges on a Medical Miracle In a world of high-stakes trades and volatile markets, you'd think that there isn't room for stories like this. But life throws curveballs, some more daunting than what you'll find on Wall Street. Take the case of Victoria, a toddler who beat the odds thanks to a groundbreaking bone marrow transplant at Nicklaus Children's Hospital in...

Continue Reading
Robo.ai Surpasses $180 Million in Q2 Revenue Surge

Updated Category News Views 5

Robo.ai's Financial Rocket Lift-off: Q2 Highlights Who would've thought a single acquisition could propel a company's revenue north of $180 million in just three months? Well, Robo.ai, with its recent grab of Quantum Core Capital (QC Capital), shattered that ceiling, showcasing what a savvy acquisition and a dash of tech wizardry can achieve. Strong Quarter, Stronger...

Continue Reading
REMAX Welcomes Alex Vidal as President Amid Realignment

Updated Category News Views 4

Step aside and pay attention, folks—there's a new player in town. REMAX has just roped in Alex Vidal as their new President. Now, Vidal isn't some rookie fresh out of real estate school. This guy has logged almost three decades in the trenches, wielding his fair share of influence across various facets of the industry. Trust me, when a company of REMAX's caliber snaps...

Continue Reading
Smart Buying in Hilton Head: Second-Home Key Insights

Updated Category News Views 1

Choosing Your Slice of Paradise in Hilton Head Picture this—not just a sandy paradise for vacationing, but a hotspot for second-home buyers weighing their options like they're sizing up their next big investment. Enter Hilton Head, S.C., a place where strategic move means scooping up properties that marry lifestyle with fiscal savvy. Sizing Up the Dream: More Than Just...

Continue Reading
ZERO Fresh Start: RAVEN2's New Era Begins Sept 15

Updated Category News Views 2

What's the Big Deal with ZERO? Alright, so here we go, folks—Netmarble's strapping in with their latest server for RAVEN2, and it's called ZERO. Ever heard of fresh starts? ZERO is exactly that. This isn't your usual server shuffle. Lads and ladies who've felt the grind’ll tell you, ZERO's introducing a slew of changes you might want to sit up for. Pre-registration's...

Continue Reading
Hyperscale Recalibrates: AI Boom or Risky Bet?

Updated Category News Views 0

Is Hyperscale Making the Right Move? Hyperscale Data, Inc. waved goodbye to the Bitcoin mining days to clear the stage for artificial intelligence (AI). But is this strategic leap off the blockchain and into AI territory as golden as promised? Whisper around the street is it could turn into a $3 billion windfall. But let's chew through the details before toasting...

Continue Reading

Top 5 Most Recently Viewed Articles

Olympus Announces New CPT Codes for iTind Procedure

Updated Category News Views 244

Final Category I CPT Codes and Reimbursement Rates Introduced Olympus Corporation, a leading global medical technology firm, is excited to report that the Centers for Medicare and Medicaid Services (CMS) have finalized the Category I Current Procedural Terminology (CPT) codes and reimbursement rates for the iTind procedure. This announcement marks a significant milestone...

Continue Reading
Stax Music Academy Honors Legacy Through 25-Year Journey

Updated Category News Views 489

Celebrating 25 Years of Stax Music Academy Stax Music Academy (SMA) proudly marks its 25th anniversary by enhancing the legacy of soul music through education and outreach. As part of this significant milestone, SMA has launched Soul of America, an annual virtual performance production, complete with a study guide aimed at educators and students alike. Engaging...

Continue Reading
Exploring the LED Driver IC Market's Rise and Future Trends

Updated Category News Views 212

Understanding the LED Driver IC Market Growth The LED Driver Integrated Circuit (IC) market is on a remarkable upward trajectory, with projections indicating it will grow from USD 3.79 billion in 2023 to an impressive USD 16.05 billion by 2032. This anticipated growth represents a robust compound annual growth rate (CAGR) of 17.46% between 2024 and 2032. The surge in...

Continue Reading
Warehouse REIT Plc Public Disclosure: Key Insights and Details

Updated Category News Views 107

Understanding Public Disclosures by Warehouse REIT Plc The public disclosure made by Warehouse REIT Plc provides critical information for investors and stakeholders deeply interested in the functioning of the company. These disclosures are pivotal for transparency, especially when it comes to positions held in relevant securities that represent significant ownership...

Continue Reading
ARGAN Shares: Voting Rights and Financial Outlook in 2025

Updated Category News Views 255

Understanding ARGAN's Voting Rights and Share Capital On an important date in February, ARGAN provided crucial insights into its voting rights and total shares as part of its commitment to transparency and shareholder engagement. This information is especially relevant ahead of their upcoming Combined General Meeting of Shareholders. Voting Rights and Share Capital...

Continue Reading