Friday, December 24, 2010

Chinese consumers in 2010

As the year inches towards its final days, most urban Chinese having continued their march on the road to prosperity, will possibly look back at the days with a sense of satisfaction. However, the year had its share of disasters and mishaps and the Chinese brow was furrowed by a number of issues and preoccupations.

Inflation and the drive towards value

While the Merriam-Webster dictionary declared "austerity" to be the global word of the year, in an opinion poll in China the netizens declared the character zhang 涨 as the character of the year. The word means "rise", "go up" or "swell" and is often used in the context of the rampant and rapid price increase in China. Its election as the most important character of the year encapsulated the consumer angst at rising prices. So far China had managed to sustain an economic growth without facing the spectre of inflation. However things have been different in 2010 and the CPI has shown steady growth and the prices of vegetables, meat, milk and other daily necessities have been in an upward spiral. The Chinese consumers are unused to this phenomenon and it came as a rude awakening that a significant part of their income is going towards increased cost of living. Expectedly this worries the Chinese consumers, and marketers will need to work harder to provide persuasive arguments and alluring offers to persuade the consumers to open their purse strings. Management of pricing and value strategies will be one of the key challenges for marketers in 2011.

Disproportionate cost of housing

They say an Englishman's home is his castle - they haven't seen a Chinaman's attachment to an apartment. A Chinese' world revolves around his house - the attachment to the apartment is possibly more pronounced because just 15 years ago, there were no apartments to buy. The fact that house prices in big cities have increased several fold in the past five years has surely added fuel to this fiery desire to own an apartment. In fact given the fact that the stock market is languishing and interest incomes are low, makes property the only investment to make a killing, further driving its price. The young Chinese do not believe in the concept of renting an apartment when starting off in life and gradually saving for a few years to buy an apartment. An apartment should be available to house the nuptial bed - according to a recent poll, 70% of Chinese women will refuse the hand of any young man, whatever may be his attractions, if he fails to produce the keys to an apartment in his (and hers) name. This adds an additional challenge to the men, who being the more numerous sex, anyway have a disadvantage in terms of securing a bride. A popular television series called Dwelling Narrowness (Wo Ju) touchingly captured the dilemmas and the tension among the Chinese in relation to their obsession for an apartment. The Chinese love for brick and mortar has far reaching implications on their behaviour. Most importantly it reduces the amount of money they can spend on consumer products as the high property prices and the high corresponding mortgages take up a large proportion of their incomes. Ironically the high cost of the house goes hand in hand with the low cost of the household cleaners used by the consumers!

Rising anger against for privileges

As it has been a while since China allowed its citizens to get rich, now it has reached the generation of fu er dai (second generation rich). These and also the guan er dai (the sons and daughters of officials) enjoy privileges and comforts which the lesser mortals can only dream of. Consequently this generation is under constant scrutiny from the public and any sign of abuse of power or money is pounced upon. A telling sign of this was the public outcry that greeted an incidence in Hebei province. A young lad knocked down a young college student and shouted "Sue me if you dare - my dad is Li Gang". The fury and lampooning unleashed on this by the netizens was unprecedented. Needless to say that Mr Li Gang (a deputy police chief) had to publicly apologize and also forego his official posiition. From a marketing point of view, it would seem that the public sympathy is with the “self-made” man – depiction of privileged generation in communication, if required, should be done with caution.

Material girl

The ambivalence towards materialism was also demonstrated by public reaction to Ma Nuo who during a popular dating type of programme said, "I will rather cry in a BMW than laugh on a bicycle". This became a major topic of debate on the Chinese internet leading to much condemnation of crass materialism and indifference to true love. Even the authorities could not maintain their distance and condemned such utterances and their negative effect on the general populace. As a marketing lesson it icautions the marketers to shun insensitive commercialism or belittle emotional relationships.

Chinese twitter and its marketing opportunities

Internet users have been on a steady increase and as per the last official survey, China had 420 million internet users. The usage of internet in China is different from the developed countries as it is seen as less of a work or efficiency tool , but more of a tool for self-expression and social interaction. Last couple of years has seen the emergence of very strong social networking websites in China including Kaixin and Renren. However, the Twitter equivalent in China was missing till the emergence of Sina microblog. The Chinese netizens wholehearted embrace of microblogging has been one of the highlights of 2010. Never fond of e-mail, Weibo (microblog) is now the preferred way to keep in touch with their friends among the many Chinese internet users. The fact that you can follow the musings of celebrities comes as an additional bonus. Clearly to marketers it opens another very important channel through which they can reach out their brands and messages to the consumers. However, given the fact that it is a medium for consumers to bond with their friends and loved ones, marketing needs to think hard and innovatively to earn its place within this. Popularity often attracts abuse and in this case the birth of "follower factories" who can turn you into an instant celebrity with more than 10000 followers, at a price of fifty dollars.

The big fair and the window to the world

Of course the grand event of 2010 was the Shanghai Expo. This was Shanghai's chance to match Beijing's glory whole stole a march over Shanghai by staging a spectacular Olympics. Shanghai Expo attracted unprecedented number of visitors and people queued for up to 8 hours to peek inside the popular attractions (surprisingly the Saudi Arabian pavilion was a major hit, apart from China's own imposing structure). The Expo became a mega fair for the Chinese, who came in hordes, not just from Shanghai but from all parts of China. From the marketing perspective, one would argue that the Expo has made the Chinese more aware of the rest of the world and paved a way for higher acceptance of the products from outside China and also more interested in exploring the world themselves in the process benefiting global tourism. From an emotional point of view, the Expo was another feather in the cap for China though the tangible, long term economic benefits of the fair still remain to be seen.

Big business under suspicion

A spat between the popular internet message software QQ and the anti-virus software called 360 raised the consumer hackles, when QQ declared that the users can not use their software till they uninstall the 360 anti-virus programme. The words of a message from QQ to its users saying, "we have made a very difficult decision" provided much fodder for the consumer caricature who used its variants to mock companies and products who show a bullying attitude to the consumers. Chinese show little tolerance to big business bullying, and companies need to tread with care and ensure that consumers are treated with utmost respect.

Increasing concern for safety

Often faced with the undesirable consequences of poor quality products, the Chinese consumers' concern for safety has always been high. Another dimension was added to this when the nation witnessed a devastating fire in a 28 storey building under renovation in Shanghai in which 58 people lost their lives. The blame seems to fall on poor safety and management practices in the renovation process. This tragedy will undoubtedly strengthen the resolve of the Chinese consumers to demand nothing but the highest levels of safety from all products and services and marketers need to ensure that they are able to deliver this.

Written by Ashok Sethi

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