Understanding Chinese Consumers
Posted on January 4th, 2009
I left China to go to graduate school in the US when I was 22, right at the time when I should have become a mainstream Chinese consumer. Instead, I became re-socialized (or “acculturated” in academic terminology) into an American consumer. Recently I was able to make a nearly month-long trip to China. With some distance now established from my home culture, I was able to observe with a fresh pair of eyes the unique characteristics of Chinese consumers and to reacquaint myself with values and behaviors that I had taken for granted before I left China 11 years ago. In this blog, I discuss three things that I observed about Chinese consumer behavior during my trip.
1. Chinese consumers are highly brand conscious. The shopping malls I visited in China were dominated by boutique stores from famous (a.k.a. expensive) designer labels such as Burberry, Salvatore Ferragamo, and Chanel. Perhaps more surprisingly, these stores were brimming with shoppers who were actually buying. Yes, having such a high concentration of luxury stores is a ready manifestation of the higher income level in a more developed China. But with most consumers’ monthly income still only enough to buy, say, two $200 Burberry shirts, the popularity of these luxury brands reveals the brand-consciousness among Chinese consumers. Even for less expensive purchases such as milk, snacks, and liquor, well-known brand names disproportionately dominate the market. Why are Chinese consumers so brand conscious? I infer that it has to do with the inconsistent quality of products sold in China. As a newly developed market economy, China has not yet established a sound market self-regulation mechanism. Consequently, consumers do not yet trust vendors in the marketplace. The mistrust goes the other way too, as most stores carry a no-return policy, increasing the risks associated with each purchase. The outcome? Chinese consumers flock to established brand names to reduce risk and protect their own welfare.
2. Consumer trends travel fast in China. Being in a collectivistic culture, Chinese consumers tend to have closer interactions with each other than people from a more individualistic culture such as America. People talk to each other more often and are more likely to have closer or even overlapping personal spaces. Adding the lack of confidence in vendors, word of mouth becomes extremely powerful in consumers’ purchase decisions. Once a new trend is initiated, it tends to travel very fast across the population. You may find, for example, many households to become equipped with soy milk machines over the course of a short period of time. Another helping factor is the unique media landscape. Although TV channels have proliferated in China in the last twenty years, the CCTV channels are still the dominant provider of national and international news. With their high viewership, these channels are able to exert an unduly influence on consumer opinions and offer advertisers a way to reach a big mass of consumers (imagine Superbowl every day).
3. Consumption in China is public. It is well-known that Asian cultures put more emphasis on education. But I experienced a more “public” version of this value. In a discussion among friends about sending their toddlers to kindergartens and schools, I overheard parents reluctantly acknowledge a pressure to send their kids to the best of schools, even if these schools come with an astronomical price tag that they can barely afford. Their arguments were that they want to give their kids the best start, but even more importantly, not to look like they are being cheap on their kids in front of their colleagues and friends. This “publicity of consumption” is further fueled by the collectivistic culture, through a higher level of willingness to meddle in someone else’s business (i.e., people will talk, even in front of you) and through a higher pressure to conform to the norm.
I should conclude this blog with a footnote that these are only my short-term observations and undoubtedly carry with them my own individual bias and the special environment of the two metropolitan cities that I visited (Hong Kong and Shenzhen). So they are only intended to stimulate the thinking of those who might be interested in marketing to Chinese consumers rather than function as golden rules of Chinese consumer behavior.