The Brand Divorce

In 2013 3.5 million Chinese couples filed for a divorce - an increase of 12.3% over the previous year. The Chinese marriage is in a crisis and more and more Chinese are choosing to part ways with their partners and live on their own. Of course many more, particularly educated women (often referred to as shengnu - leftover women or victorious women - depending on the character for "sheng" and your point of view) are choosing not to cast their lot with anyone at all. Similar statistics are hard to come by for the number of Chinese consumers who divorce the brands they have been using, often after years of relationship. However it is clear that the consumers' predilections in personal lives are also reflected in their purchase behavior and brand choice. Chinese purchase behavior is characterized by promiscuity and flirtatiousness, and often resistant to settling down in a faithful and long lasting relationship. What are the root causes of this Chinese detachment and is there a commonality between what is causing the Chinese to shed their bonds with their partners and with their brands? 

Why do so many Chinese marriages end up in a divorce? And do similar reasons prompt them to cast aside the brands they were once in love with? Research shows that there are four main reasons which prompt the Chinese couples to part ways. 

First and foremost it is an erosion of trust. It could be a lack of trust in the spouse's fidelity, or financial conduct or the single-mindedness of the devotion. The brand marriage is also rocked by a lack of trust. Chinese consumers are prompt in divorcing a brand which they feel cannot be trusted - whether it is in terms of safety, quality or honesty. Of special note here is the aspect of safety, where many consumers feel let down by brands which offered products which could harm the health of the consumers and their families.

The second cause of marital discord and subsequent break-up is financial differences. Who should pay the mortgage or the maintenance, where and how should the savings be invested and who should command the household finances. Brand marriage is also rocked by financial differences. Chinese consumers decide to divorce the brand if they feel it is charging them too much and isn't really giving them a good value for their money. Value assurance is perpetual challenge for brands and they need to continuously monitor their perceived worth in the consumer mind.

Marriages also crumble and the couple become distant when their interests and needs start diverging. Brand marriages also crumble when the consumers' interests and needs change and the brands are not able to adapt to the changing needs. Consumer needs are evolving and becoming more sophisticated. Brands need to sharpen and contemporize their proposition to keep up with these changes.

Finally marriages flounder when the love starts to disappear and the relationship becomes a functional dependency and loses the emotional bond which brought the couple together. Couples keep their relationships vibrant and fresh by tender touches, emotional gestures and meaningful communication. Brands in China also need to learn to sustain the romance and keep the marriage healthy and long lasting. 

Managing consumer brand relationships becomes so much easier when we try to understand them with the metaphor of human relationships. Is your relationship with your consumers a healthy and stable marriage or is it a marriage-on-the-rocks?

Written by Ashok Sethi

ashok.set@gmail.com

Ashok is the Managing Director for GfK Custom Research in China

Chinese Manufacturing and Indian Service

The Ministry of Commerce in China recently announced, that the nation has toppled the US and taken the crown of the world’s largest merchandising trader.  Much of this achievement is based on an extraordinary success in manufacturing. China has clearly established its name for its manufacturing prowess. Half its gross domestic product is accounted for by manufacturing. Its plant and factories, churning out huge quantities of washing machines, refrigerators and mobile phones, cater to the insatiable demand of consumer goods in China and also cater to the global appetite for cheap goods. China is the largest trading partner of 120 countries, including India, and with most of them enjoys a favorable balance of payments situation because of successful export of its merchandise. China hence has developed capabilities to efficiently produce these goods not just to meet its own demand, and export to the whole world.

There are several factors which provided a fertile ground for the development of China’s manufacturing industry. China's manufacturing strength is due to its entrepreneurship, good infrastructure and efficient supply chain. The manufacturing boom also occurred at the cusp of huge urbanization, when millions of young Chinese villagers were free and eager to move out to supplement their meagre agricultural income and willing to work as cheap labour in factories. But the manufacturing industry also owes a debt to the fact that as a people, the Chinese are prone to follow instructions, stick to processes and work in a disciplined manner - exactly what manufacturing calls for.

On the other hand, services, though growing healthily, remain a weakness of the Chinese economic model. The Chinese tend to apply the same uniform standards and processes to services, which they employ to manufacturing. This often results in a sub-optimal offer, as services intrinsically have a higher variability in its demand. A three star hotel in China will nearly uniformly provide you clean rooms and sheets, a functioning television and a passable restaurant – but seldom anything more.  The Chinese service model is based on the principles of assembly line of the manufacturing process. The service is divided neatly into different processes and a standardized delivery of a basic quality is designed for each element. Standardization rather than customization is the goal. Airport staff at boarding gates in Chinese airports play recorded "thank you" messages while they scan the boarding cards. “If you have to thank every customer, why not have a recording to spew it out than leave it to the whim of fickle humans,” the Chinese think. 

Indians on the other hand are free-spirited, creative creatures of their own whim and will. They need variety and opportunity for creativity and extemporisation. Manufacturing is stifling for the Indians - it is the creative, on the feet servicing which is their forte. Unlike China’s manufacturing dominated GDP, it is the services which reign supreme in India, accounting for more than half its GDP.

The Indian service model, is based on the concept of customised service, which results in more tailor-made and specific solutions for the customer, often resulting in a higher level of problem solving and satisfaction. However, the Indian service also embodies a high level of variance. A three star hotel in India will show high variation with a quality of facilities and service which could, on one end rival a five star hotel, and on the other hand offer barely liveable accommodation.

Additionally, the Indian model is vulnerable to the whims of fancies for the people who are providing the service.  If you are lucky, you will be greeted with a beaming smile, solicitous attitude, and made to feel like a king. On a bad day (her bad day, which soon becomes your bad day too) you may be scowled at and blamed for interrupting her well-deserved rest.

But most of all, her behaviour and attitude will be based on what she feels the particular customer deserves. Coming from deep notions of a class based society, the behavior will often depend upon at what level or class of society does the person behind the counter pegs you at. Hence, if you are neatly dressed, exude an air of confidence and sophistication, you may be greeted with a smile. On the other hand if you present a bedraggled appearance and are classified as ordinary riff-raff you may be treated with perfunctory callousness. While flexibility is an asset for Indian service, extreme variability is a weakness. Indian model could do with a bit of standardization and learn from the highly homogeneous, low variance output of the Chinese

In this context India's software industry is clearly vulnerable to competition from China. In the long run Chinese are likely to prove themselves to be better in writing code than the Indians - though Indians may still hold an edge in the systems analysis and design. Surely this presents an obvious opportunity for cooperation and collaboration between the two countries.

Written by Ashok Sethi

Ashok is the Managing Director of GfK (a Global provider of market research and consumer insights) in China

Digital year of the horse

China today has 618 million internet users. Internet has pervaded all aspects of life - from buying fresh vegetables, to seeking employment or seeking a life partner. The new year festivities, are on the other hand, one would expect would be seeped in tradition and celebrate the timeless customs. However in China the new year festivities, heralding the year of the horse, have taken a distinctive digital turn.

Firstly, the new year is a time for reunion with families, particularly for the 260 million migrant workers, who toil throughout the year, often away from their families and children. Hence procuring a train ticket to arrive home is of utmost importance. A few years ago, the Chinese  railway  went online and started offering tickets on its website www.12306.cn. The ticket sales would normally begin around a week before the commencement of the journey. Within a few seconds the system is bombarded with millions of requests, and the tickets are often sold out even before you can successfully log in. Local internet companies like came to the rescue with plug-ins which automate the process of trying to login and get into the system. Of course, many cried foul against such ticket snatching plugs, but not before millions were able to benefit from this software to secure a ticket for a ride home, prompting the website to take steps to block the intrusion from such rogue plug-ins. 

Then there is the practice of exchanging greetings, and wishing each other success, happiness and most importantly prosperity in the coming year. Mobile phone SMS became the de facto medium and 31 billion short messages were exchanged over the cellular network in 2013. 2014, however, saw a sharp decline in the use of SMS - only 18 billion SMS greetings were exchanged - an over 40% decline over last year. The exchange of greetings shifted online, particularly to WeChat, an online messaging platform akin to WhatsApp.

And lastly, the new year is not only the time to exchange greetings, but also more substantial hongbaos or red envelops, normally stuffed with a certain amount of cash, and dished out particularly to the younger and the junior. The hongbao gifting also made its way to the digital arena, with  the facility to gift a hongbao from WeChat. You do that by linking your bank card with your WeChat account, which allows you to gift money, just as it allows a host of other e-commerce activities. Tencent (owners of WeChat) claimed that more than 75 million hongbaos were gifted during the first three days of the Chinese new year.

Digital, hence, has conquered another area of tradition, but in true Chinese spirit, not by destroying what is precious and beautiful in the age old practices, but by further enhancing the joys and jubilations associated with this important festival of China.

Written by Ashok Sethiashok.set@gmail.com