Ogilvy & Mather" /> SHANGHAI (AdAgeChina.com) -- Marketing in China's smallest cities and towns remains a mystery to many advertisers in the mainland.

Consumers in China's fourth-tier towns to its sixth-tier villages account for 37% of the country's population, but those markets have notably different consumer cultures and retail landscapes.

To make sense of the challenges facing multinationals as well as Chinese companies, Ogilvy & Mather has published a book about consumers, brands, communication and retail opportunities in the lower tier markets called "China Beyond."

The research was conducted by a team from Ogilvy & Mather, OgilvyAction and Dawson Integrated Marketing Communications, led by Kunal Sinha, O&M's executive director of discovery, Greater China in Shanghai.

From March through November 2008, they conducted field research in six county-level cities and six smaller towns and villages, doing in-depth interviews with 30 families, 48 retailers, 12 digital equipment store owners, 12 wholesalers, 12 internet cafes and 30 young people aged 15-25.

Below is a chapter from the book that separates fact from myth about China's one-child policy, and the implications for advertisers. It was written by Mr. Sinha and Saurabh Sharma, a strategic planning director at Ogilvy & Mather in Beijing. (Watch a video interview with Mr. Sinha about the research and this chapter on YouTube below. Ad Age China readers in mainland China, where YouTube is blocked, can view it on Youku.com here.)





Everywhere you go in a fourth, fifth or sixth tier town in China, you'll see kids. In the marketplace ? sitting on their mothers' laps as they go about their business, on streets, playing tag or hide-and-seek between the shopping alleys, hunched over video games at the game parlors, around community squares, in hobby classes, at preparatory schools, in the living room and almost everywhere else.

Unlike in the big cities, where China's one-child policy is strictly adhered to, many of the families in these small towns choose to pay the fine, and have two, or sometimes even three kids. Others bypass the system and get themselves a village hukou [a family register]. At least 25% of the mothers we met sported a bump.

China, like many other Asian countries, has a long tradition of son preference. The commonly accepted explanation for son preference is that sons in rural families may be thought to be more helpful in farm work. Both rural and urban populations have economic and traditional incentives, including widespread remnants of Confucianism, to prefer sons over daughters.

In most rural and minority population areas, families are allowed to have two children if the first child is female or disabled -- which is tacit acknowledgment even on the part of the government of son preference. There is, of course some criticism that this policy discriminates against the Han Chinese. Ethnic minorities -- who represent about 10% of the total population, accounted for 42% of the net increase in China's population between 1990 and 2000. According to a recent survey, ethnic minorities are currently growing about seven times faster than Han Chinese.

This singular factor makes small town and rural China different from big city China. What makes these kids special is not just their numbers; rather, it is the role that these kids play in the family, their impact on small town society, and perhaps even the local economy.

Owing to limited opportunity for growing one's business, or in the absence of jobs that allow them to earn a lot of money, most of the families in these small, low tier towns, lead somewhat predictable and content lives. However their contentment or limited planning about the future does not apply to their children, who are an exception to the 'slow and steady life is a good life' mindset.

The parents' enthusiasm to give their child the very best, and their endeavor to prepare the child for his future life, has spawned a whole industry. By that token, the parents in small towns are not very different from those in the big city. They share a similar desire to give the child the very best, to provide the child the best food, and ensure that he or she looks good. Shop shelves showcase baby products at strategic points in convenience stores, especially food and hygiene products.

Only their relative number seems greater. We were in Jining and Yanzhou in Shandong province about a month after the tainted milk scandal, and almost every store reported a sharp drop in the sales of local milk brands. Parents were wary, and did not mind spending more in buying multinational brands which had been found safe.

Children are offered the best recreation that their parents can afford to buy. So parents who can buy a big toy car, that the child can ride do that; for those who can't afford to buy, there's a 10 minute ride on similar cars in the town square for a rent of two or three yuan [less than fifty cents US].

The second stage of childcare encompasses preparatory schools. This is where kids get the best pre-school training. Along with schooling, hobby classes begin. There are all kinds of hobby classes that children can join, in order to develop a more well-rounded and talented personality.

The streets are dotted with handwritten and hand drawn posters and testimonials of kids who have performed well after studying in such hobby courses/schools. Acquiring a talent for the arts can be a safety net, in case the child does not excel academically, or propel the child into stardom. There are plenty of such opportunities on provincial TV, such as "Cheers! The Young King" in Shandong, "Invincible Lucky Star" in Yunnan, and "Rainbow Road" in Anhui.

Children are given a lot of freedom within the social norm. Parents say they are more flexible with their children than their parents were with them.

Zhang Yingqi, a primary school teacher we met in Heshan had allowed his daughter to draw on the living room walls of their home and had pasted her many drawings on the wall. "She likes to draw, and I do not want to stop her flow of talent."

Children are symbols of hope, of change for the better, in the way families live today. Having two children is a good way of hedging their bets.

The child's performances in school and outside are symbols of the family's performance. Certificates acknowledging the child's performance, no matter how small or big, have a special place at home. An entire industry has mushroomed around enabling the child's future. It is interesting to observe how they are segmented.

For children who perform well, there are national universities. Lesser achievers can still opt for private universities. For students wanting to get jobs instead, there are multiple vocational courses.

Underlying this phenomenon is the insight that families never really give up on their children. They leave no stone unturned to help him or her get somewhat qualified.

Families don't compromise the time and money invested in ensuring a brighter future for their children, or pampering them. For instance, on her child's birthday, instead of choosing the birthday gifts, Li Yun's mother prefers to give her money to buy whatever she wants. But the children reciprocate. It is quite common to find children buying gifts for their parents from their pocket money. For parents, young kids remembering their birthdays and wedding anniversaries fills them with joy.

All through the day, one can see mothers ferrying their children around, mostly on the back of their bicycles. At the end of the school day, the smaller kids pile into colorful trishaws and are dropped home, or simply walk. School buses are a rarity. With an older sibling to take care of the younger one, the walk home is safe, chatty and enjoyable.

That said, a lot of planning and preparation goes into ensuring that the child is prepared for the challenges of the tough world outside. It is not atypical to see parents grooming children in some vocation from their early years, so the child is independent or carries on a family talent or legacy. For instance, we encountered the young granddaughter of a musician and opera performer who was being groomed intensively to perform in the future. The family is led by her grandfather; her 26-year-old father, himself now a father of two, still lives in the shadow of his father. It is not rare to find kids who follow in the footsteps of their parents in small town China.

Children are so important that on the last day of boarding school, when the child returns home for a long break, is a big family occasion. The whole extended family is there at the school gate to receive the child.

The small town child is never lonely. He or she has a sibling, an extended family and neighbors to socialize with. The entire neighborhood is their playground. In Gao village in Shandong province, ten-year old Song Yuanyuan was our guide. She walked us through the lanes and into the courtyards of her friends' homes. They joined in like an entourage, stopping to fetch badminton racquets for an impromptu game. No Gameboys, mind you.

At the community entertainment center, which comprised a roller skating rink, a dance floor with flags, a disco globe, and pool tables, 11-and-12-year-olds hung around. This may be the kind of socialization that makes them more adaptive when they grow up and move to a big city. The big city kid, in contrast, would probably behave the same way, but in cyberspace.

In the very lowest tiers, there is double the ambition riding on these kids. They are looked at as the future change agents who would bring something new and promising to the family ? all of whom are looking for change in their living and economic conditions. The more time and resources parents invest in them, the more is expected of them. There is a strong sense of unstated reciprocity in that way.

This social reality offers many opportunities for marketers and advertisers like us, to leverage and become more relevant to consumers. At a more fundamental level, if brands can empower kids, they would play a big role in uplifting society towards more prosperity. Personal technology brands can position and promote their productivity tools as objects that help kids perform and build a better future, and their entertainments products as a reward for the hard work or performance of these children.

There could be interesting ways of leveraging this social sentiment towards kids, while keeping in mind the relatively finite purchasing power of the families. Fast moving consumer goods that are not targeted at kids directly could offer promotional giveaways for kids that would provide a bigger reason to buy. Trade promotion schemes could be designed around scholarships to fulfill a child's dream (or a parent's dream for the child). For example, a trade promotion for a passenger car tire brand could offer a scholarship for a child's higher education as the grand prize. This could suddenly turn a commodity promotion into one that the whole family engages in.

Fundamentally, all parents want their kids to do well, but the success stories that we heard were more out of chance or circumstances than careful planning. In spite of a focus on the child's future, there are few formal and reliable avenues for kids or their parents to learn about what kind of future career choices are suitable for them.

Very few children tried new things that reflected their own likes or dislikes -- everyone seemed to be trying to be a lawyer, engineer or economist. This situation offers an opportunity for large brands to help kids know their real potential and sharpen their skills to focus on the right kind of subject and career choices.

I can visualize a 'skills and aptitude testing mobile lab' that goes from town to town helping kids discover themselves. A brand like Lenovo could take a lead in such a grassroots initiative because in any profession, the computer is a tool that can be used by all. An activity like this would establish the brand as an enabler in self-discovery, and consequently unleashes a person's true potential. This would go reduce the 'influence of chance' so a child can know his real strengths better and set more realistic targets.

Many other potential touch points emerged. The last day before school holidays is a great time to reach both kids and parents. Everyone is very happy on this day and we know that happiness reduces the barrier to trial and purchase. This is a great opportunity for sampling and sales. The school gate is the place where it can be done. Whether it is selling holiday packages, sampling a new kids' drink, displaying and promoting a new luggage brand, selling digital cameras or mp3 players -- it is a great place to be.

We observed many children coming out of the school gate did not have proper bags to carry their schoolbooks. This is a tremendous opportunity for a luggage brand to be present in a relevant way. By offering small nylon bags for free to help people carry their stuff, the brand might not be able to sell much but would successfully plant itself in the minds of the family in a way that makes them consider it at the time of future purchase. The local community entertainment center is another great place to engage kids and teenagers, as are modes of transport, such as the trishaw and the covers of the rear bicycle seat.

We have discovered that the sphere of influence of the small town child is arguably larger than that of the big city child. It is up to us to help involve the child in creating a better future for them and for the brands that we handle.

Kunal Sinha is the Shanghai-based executive director of discovery, Greater China at Ogilvy & Mather, where he oversees the consumer insight and knowledge management function across all divisions of the agency. He is also the author of China's Creative Imperative: How Creativity Is Transforming Society and Business in China.


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