As many companies, both national and international, seek to expand their business in China, it is critical for a marketer to keep a hand on the pulse of the consumer. The country’s sheer vastness, complexity and diversity as a market are as well established as the recognition that marketing strategies need to be tailored to take into account the huge differences that exist in such an economy.
As unique as the Chinese market is, many of the hot topics discussed in relation to its development are not--other countries have undergone similar changes. What is fundamentally different is the scale and speed of change. This accelerated growth in China’s consumer market is expected to continue--offering manufacturers and retailers, both national and multinational, huge opportunity.
As a result, the rapid expansion of product categories, modernization of the market place, evolution of retail sectors and increasing consumer demand has driven a booming need for insight and understanding. To increase the chance of success in China’s complex and sophisticated market place, I urge companies and brands to think about the following points:
1. There is no average, one-solution-fits-all Chinese consumer.
No brand looking to enter Europe would imagine that what appeals to the Spanish consumer would be the same as what appeals to the Norwegian consumer. There are massive differences between them. China is bigger, more fragmented and more culturally and economically diverse than Europe. This fragmentation will only increase and brands must look at China as a continent rather than a single country or market.
2. Evaluate Chinese markets based on tiers, not geography.
The classification of cities into ‘tiers’ is a system originally used by the Chinese government and is now used generically by most companies doing business in China--often without understanding what these “tiers” actually mean. The reality is that this system, for marketers, bears little relevance to the actual consumer. It reflects neither average income nor population, amongst other critical factors. In TNS, we now tier the cities based on a set of variables including per-capita GDP, retail sales, population, degree of urbanization and the total wage bill.
Although convenient, to assume that consumers in China can be understood according to the city in which they live is as misguided as the generalization that Shanghai is reflective of all of Eastern China.
There are currently 273 cities in China with a population of more than one million. And with 20 million rural consumers moving into urban environments each year, many more cities are growing quickly. The truth is that people just don’t know much about these other cities. Do your homework by visiting these cities or working with companies on the ground who really do know what is going on there.
Not all companies have the budget to do research in 200+ cities, but that’s still no reason to make assumptions based on a handful of cities.
3. Win over female consumers.
Nearly 80% of adult women in China are in the workforce. Women in China are empowered, they have status and they have money. As a marketing target, the traditional ‘housewife’ is not especially important.
That said, the role of housewife is still part of the balancing act for women in China. They are independent professionals, yet still subject to the expectations placed on the traditional Chinese housewife. It is a dilemma for women that companies need to help them solve. Those who bridge being a successful businesswoman with being the perfect wife and mother will win.
4. Don't make assumptions about China's middle class.
At 100 million strong and growing fast, it’s hard for any marketer not to be aware of, or tempted by, China’s middle classes. But ask ten different companies what constitutes ‘middle class’ and you’ll get ten different responses.
Essentially, the term is used to refer to the rapidly expanding ranks of people with a disposable income that allows them to buy goods and services beyond those essential to survive. But definitions are not the same as understanding. Making assumptions about China’s middle classes based on what constitutes middle class in another country is not real understanding.
5. Local players are a bigger threat than you expect.
Just because China is still developing does not mean it hasn’t already developed. There is no virgin territory despite the massive number of cities.
Today, every place in China that a foreign company can go, it will encounter local competition that is strong, smart and growing in marketing sophistication. Local players have distribution and brand awareness, but more importantly, they have more knowledge and understanding of their markets-–an advantage that many now maintain through market research. With more than 1,200 brands of shampoo in China today, shampoo makers understand the need to remain competitive now that they are faced with multinational competition.
6. China is becoming modern, not western.
To say China is westernizing is to imply that it is following the west. It isn’t. China is taking from the west together with other markets such as South Korea and Japan in northeast Asia, while at the same time drawing on its own cultures and experiences. It is modernizing, not westernizing, and the difference for the marketer is more than semantic.
Jim Sailor is managing director, Greater China at market research company TNS in Shanghai.