China India Musings

Chinese consumers in 2011

2011-12-25T10:04:00.004+08:00

As the world prepares to bid adieu to 2011, the Chinese still have a few weeks before the year of the rabbit sprints off and the mighty dragon is ushered in. The developed world has seen a miserable year and this has been a tough year for the Chinese too. Inflation has been consistently high - the consumer price inflation finally being reined down to under 5% only in November, economy is slowing down - and the Shanghai Composite index has lost more than 20% of its value since the beginning of the year. However 2012 is the year of the dragon - which is as propitious and auspicious as they get. With furrowed brows and much on their mind, the Chinese look back at 2011 with reflection and look forward to 2012 with optimistic anticipation.

Slow train coming

While in 2010 the nation witnessed a devastating fire in a 28 storey building under renovation in Shanghai in which 58 people lost their lives, in 2011 it was the Wenzhou train crash which resulted in similar protestations and lament at a preventable tragedy. China has been on the fast track in developing the largest fast train network in the world, with trains running at speeds of up to 350 kms an hour. The “gao tie” high speed train service between Shanghai and Beijing was inaugurated around the middle of the year and now consumers can do this journey of 1300 kilometers in just over 5 hours. However, the euphoria over this undoubtedly extraordinary achievement was short lived, when two high speed trains collided (though on a different route) taking many lives with it. The Chinese citizens were aghast and protested vociferously against suspected flouting of safety standards and lack of transparency. Transparency is something the Chinese have begun to value more and more - whether it is from the government or the companies who try to sell to them.

Swill oil and other food horrors

A few years ago the Chinese encountered the "melamine tragedy" - in which unscrupulous middlemen adulterated milk with the chemical. Hundreds of children developed stones in their kidneys and a few lost their lives. This year the consumers continue to be confounded by more food scares - the most horrifying of which was the alleged recycling of used cooking oil from sewers next to the restaurants. Consumers were also scared out of their wits by feeding of clenbuterol to pigs, which results in lean meat but can cause nausea, dizziness and heart palpitations in people who eat animals that were fed with it. We can be sure that the consumers are going to demand the highest level of food safety from manufacturers in 2012.

PM2.5 detector on the roof of the American Embassy

The health concerns of the consumers were not just confined to what they ate, but also the air they breathed. The number of smoggy days in Beijing and other big cities seem to have increased in recent times. Consumers complained that the official reports on air pollution were not accurate when they saw the results of the air pollution monitor that the American Embassy installed on its roof in Beijing. The Americans also measured PM2.5 particles (particles in the air with a diameter of less that 2.5 microns) which some scientist believe are actually more harmful than the larger ones. The government now has agreed to report PM2.5 in their pollution reports and hopefully the citizens can breathe more freely and look forward to cleaner air in 2012.

Rousing out of callousness

The Chinese have often felt that, preoccupied with the pursuit of money, there is certain degree of callousness that has overtaken the country and we often ignore injustices around us and hesitate to extend a helping hand. It took the tragic death of 2 year old Yueyue that roused the collective conscience of the nation and the Chinese took to upbraiding themselves for the thickness of their skin. The two year old was run over by two vehicles in Foshan, Guangdong and ignored by passerby’s till a cleaning lady took notice. It is believed that a major factor which restrains the helping hand is the fear that the rescued may turn into an accuser, as it has occurred in a few cases in the past. Several prominent professors from leading universities offered to compensate their students and cover their liabilities if they were ever sued by the subjects of their help. 2012 should see more sensitive hearts and a more willing hands in China.

Bad news for entertainment

In 2011 the authorities thought they need to protect the consumer from too much entertainment and also too much advertising. Firstly in March Chongqing television decided to go totally “ad-less”. In October, the State Administration of Radio, Film and Television (SARFT) decided to limit each of the country's 34 satellite channels to a maximum of 90 minutes of entertainment content from 7:30 pm to 10 pm every day. The remaining time, it was suggested, should be filled with news and programs to uplift the moral standards of the viewers. And most recently the officials announced that the government would impose a ban on advertisements in the middle of television dramas starting in 2012, though the ads will appear in the beginning and the end of the programmes. The marketers and the advertising industry feel that they can cope up with it – though some experts feel that it may drive more advertising to the digital medium.

China's own heaven

Largely an atheist nation, and not believing in the existence of heaven or hell, the Chinese have created their own heaven in space. Tiangong-1 or "Heavenly Palace -1" space station module was successfully launched this year. Subsequently Shenzhou VII spacecraft gloriously docked with the space station and returned back to earth in one piece. It is believed that this is a strategy to compensate for the possible decline in Chinese exports, by opening up a new revenue stream by renting space in the Chinese "heaven" to the religious departed from the West.

Marriage for love

It its attempt to foster greater love and lower commerce in marriage,
the Chinese courts made it clear that a home purchased before marriage is the personal property of the person who bought it. In case of divorce, the registered owner will keep the house but needs to compensate the partner if he or she contributed to any mortgage payments and any other expense which increased value in the property. The amendment to the marriage law was largely seen as rational, though the view was divided on whether it will discourage fortune hunting and result in a greater number of marriages being founded on the solid rock of love.

Naked marriage and other dressing downs

Confounded by rising cost of marriage, a new trend of naked marriage took shape in 2011. Contrary to what is suggested by the name, the nuptials do not take place in a state of undress; the "nakedness" is merely figurative and indicates that the couple took the plunge without the usual extravagant preparations and expense which accompany the occasion. The phrase caught the fancy of the citizens and they quickly coined other things that you can do with a similar degree of unpreparedness or vulnerability - such as naked resignation (resigning without another job) or naked examination (showing up for the test without adequate preparation). 2012 should see more the Chinese showing more willingness to break away from the herd, and follow their own hearts and minds.

Written by Ashok Sethi
Ashok.set@gmail.com

New languages of the Chinese internet

2011-10-19T16:26:00.002+08:00

Chinese Weibo

When we compare the Chinese microblog (Weibo) with Twitter, we often forget that as each Chinese character is, in fact, a word. This means you can communicate a lot more in 130 Chinese characters as compared to 130 Latin characters. Chinese microbloggers are fully utilizing this freedom and license and the Weibo has become a hotbed of protest, expression of solidarity, generosity and philanthropy and even romance. The last one did lead to some unexpected consequences for a Chinese official, who mistook Weiboi as a one on one, private communication tool and was found to be romancing his mistress and fixing a surreptitious rendevous, in open sight of millions of bemused Weibo users!

First on Weibo

It is not surprising, therefore, that often Weibo is the first to report important news and generate a lively debate. When China’s image of progress and dynamism, assiduously created by erecting an enormous and still expanding network of bullet trains, was tarnished with a collision of two trains near Wenzhou, in which more than 30 people lost their lives, the accident was first reported on Sina Weibo (a popular Chinese microblog). The topic touched a raw nerve with the Chinese consumers and the continued discussion on Weibo thereafter generated strident criticism of the railways for lack of transparency and possible flouting of safety standards. The authorities have taken the lashing seriously and have withdrawn several trains for safety examination and actually reduced the speed of many trains, including the flagship Shanghai to Beijing service. The defiant mood is characteristic of the Chinese middle class consumers, who are trying to protect themselves and their families from anything ranging from sub-standard infant milk powder, to restaurant food prepared from recycled oil to unsafe rail travel – and quite often Weibo is the platform where they first air their grievances.

The language of the internet

It is often said that the development of a civilisation or a society is indicated by the degree of sophistication of its language. In Weibo and other parts of the Internet, Chinese netizens have developed not one, but several languages on the internet. These, referred to as "Mars languages" (火星文) are widely used on the internet not just by the consumers, but now increasingly also by the marketers. These include "pao xiao ti " or the roaring style, which the consumers often use to express their frustration on the many challenges of life – often linked to study and work. Or the “tao bao ti”, named after the all pervasive e-commerce platform called Taobao, where you can buy anything from a freshly slaughtered chicken to a luxury automobile. “Tao bao ti” embodies the solicitous attitude and the language that the vendors on Taobao often adopt to win customers in face of an extraordinarily fierce competition.

高考(Gao kao), the mega test of endurance and knowledge that the young Chinese need to go through to secure college admission, unfortunately decided to prohibit the use of 火星文(Mars language) in the exam, earning the epithet of "ungelievable" (meaning not cool or awesome) from the 8 million students who undertake this examination in an attempt to secure a position in a good university and pave the way to a bright future. These students, who face immense pressure (yali da 压力大as they like to say - which can also mean "my pear is big” when you change to another set of homonymous characters) will have to curb their inclination for these unorthodox modes of expression - at least for the two and half days that they toil in the examination hall.

Written by Ashok Sethi
ashok.set@gmail.com

Demographic dividend or population explosion?

2011-09-17T14:10:00.001+08:00

Counting the millions

2010 was the year of census operations and billions were spent in enumerating and profiling the populations of the largest countries in the world. The greatest contemporary world power, the United States, as well as the future powers of China and India undertook the onerous but important task of counting their residents. Currently China retains the crown of the most populous country in the world, though its status is increasingly threatened by India. China announced that it added 73.9 million Chinese from 2000 to 2010, taking the current population to 1.37 billion. India on the other hand exhibited a much higher level of productivity and added 181 million Indians in the same decade, taking its population to 1.21 billion - a mere 160 million short of China's. US on a more modest base only added 27.3 million Americans. But its growth rate in the decade was nearly twice as high as that of China but only half as much of India.

Demographic dividend

Historically India's high fertility rate and rapid population increase was often referred to by economists and experts as "population explosion" - an ominous phenomenon threatening the country’s multitudes with misery and starvation. However, economists are a malleable tribe, who like to show flexibility and often change their views with the direction of the wind. Today, India's teeming millions are being referred to as the country’s "demographic dividend" and expected to help it maintain its economic growth engine, even help it surpass China’s economic pace some time in the future. The logic of having a large proportion of the population in the economically active age group (that is to have a favourable dependency ratio) is irrefutable - this group has to generate the resources not only for themselves but also look after the youth and care of the elderly who are no longer in the work force. However this needs to be balanced with the cost of over population and low share of family resources that each child enjoys in large families. Surely it does not condone having hordes of children by penurious parents who do not have the wherewithal to bring them up, educate and prepare them to be economically productive citizens. The logic of having large families just to ensure a good supply of income earners for the nation does not seem to stand scrutiny in today's resource scare and over populated world.

Even if we do accept that having an adverse dependency ratio, places a burden on the society, the answer for the developed countries could be in other measures, including higher retirement age and relaxed immigration policies, which will attract migrants of income earning age into the country and redress the imbalance. This is precisely what is happening in the US - where the population increase is mainly contributed by the Hispanics and the Asians, rather than white population. In fact this may offer the best of both worlds - ensuring that there are enough income earners, without having to invest in creating, educating and developing them! Like running its IT services, US can consider outsourcing the task of maintaining its demographic dividend to India!

Additionally while comparing the "demographic dividend" of India and China the economist also need to take into consideration the economic potential of the population. On this criterion, China scores a lot higher, given higher education levels and a much higher participation of women in the workforce.

Wanted : 24 million brides

The census also indicated that both China and India continued to suffer from a gender imbalance with China having 51.3% of its population as male. Experts estimate that 24 million Chinese men will be unable to secure a bride in the next 10 years. Unfortunately neighboring India will not be able to help much as it is likely to face its own scarcity of marriageable women – India’s population is 51.5% males (but only 914 girls for every 1,000 boys under the age of six). US could come to rescue - as it has more females than males (50.8% females) though currently one sees more evidence of American men succumbing to the charm of Chinese women, than Chinese men seeking American brides!

Written by Ashok Sethi

Ashok.Set@gmail.com

Retailing in small towns

2011-06-28T17:38:00.000+08:00

The diversity

China has 654 official cities, whose urban population ranges from over 20 million residents for Shanghai to less than a hundred thousand for a small county level city. The cities differ not only in terms of the population but also in terms of economic activity, occupational profile, income and spending ability of the residents. As the top tier cities become more competitive and saturated, more and more companies are taking their wares to the smaller towns in search of new consumers. The important marketing question is whether the marketers should paint the smaller cities with the same brush stroke and replicate their large town strategies and tactics for these emerging markets, or should they modify and fine-tune their actions to enhance their effectiveness?

City tier or geography

There is a school of thinking which propounds that city tier differences are becoming less consequential and geography takes precedence in determining consumer behaviour and not city tier. It is expected that the differences between neighbouring large and small cities will gradually diminish and consumption patterns become more homogeneous. The reasons are because development of better transportation and high speed railways will encourage more movement among the cities and the large cities will expand their boundaries and take some of the neighboring cities under their fold,. However there are intrinsic differences between large and small cities (population is the usual basis for dividing cities into various tiers) in terms of consumer profile, lifestyle and media habits which have significant implications on marketing.

In Shanghai over 3.2 million adults enjoy a monthly household income of over RMB 100,000 and in Nantong, just 100 kms away, only around a 100,000 adults have the same income. The relative strength of various media is vastly different across different city tiers. While internet penetration is increasing in lower tier cities also, the frequency of use is much higher in larger cities as compared to the smaller cites (78% of internet users access the net every day in tier1 cites as compared to only 28% in tier 4). Similarly while nearly all large city internet users access the internet from a PC at home, in smaller cites, reliance of iCafes is significantly higher.

It is natural that in a geographical cluster of homogeneous cities, similar strategies would work, but when the cities within a geographical cluster are heterogeneous, different strategies need to be adopted.

Implications for retailers

Despite the differences today, the smaller cities are in transition and a huge change is underway - the change is in terms of movement from traditional trade to organised trade, from primitive modes of transportation to modern ones, from old run-down houses to modern swanky apartments, and from traditional entertainment venues to the modern ones. Malls and retail outlets need to help the consumers in this transition – facilitate access the new things they want and at the same time help them preserve what they cherish from the old. We give below eight implications for marketers and retailers as they move from large cities to smaller ones.

1. Consumers in small towns want to make the best choices and derive the best value for their money. In order to achieve their aim they are willing to go to greater lengths than consumers in larger cities, who are more driven by convenience. Convenience, therefore does not enjoy the same importance in smaller cities as it does in larger cities. Consumers in large cities are time poor and cash rich - whereas for those in lower tier cities just the reverse holds true.

Store designs often have to make trade offs between convenience and thorough immersion and good exposure of the consumer to the full range of products. The trade-offs in larger city tiers are often made in favour of convenience. One exception to this rule is IKEA stores, which even in big cities sacrifice convenience for exposure. The IKEA strategy is the one which retailers need to follow in lower tier cities - let the consumer see the products properly, have a good experience - even if it takes more time and causes a bit of inconvenience.

2. Access and location. Most small towns and cities have a predictable lay out with a central area clearly defined and marked out. Consumers often converge to the centre and public transportation often runs from the centre to the outlying areas. This central area, therefore presents the most logical location for retail establishments. While a central location may still be possible in smaller cities, over time newer malls and departmental stores have no option but to open in relatively distant areas. Retailers need to have a strategy for attracting the consumers to the store in these locations. This could include free transportation, identifying potential transportation hubs such as metro stations or addition of some specific services to the mall. Mall owners and retailers must study the local situation in each city and decide on the ways to compensate for location deficiency if it exists.

3. Educate the consumers. Given the relatively small history of branding and quality products in China, many buyers are first time buyers. Over 50% of luxury goods buyers today have never bought luxury before. Retail outlet for them is therefore not just a final purchase point, but a place to evaluate the various alternatives - often with no prior experience. In this context, the consumer may often be confused and the retailer may lose the sale if the consumer is unable to decide. The retailer in small cities has the job to educate and guide the consumer and help them make the decision.

Recognising this, many marketers add in-shop demonstration and education activities to help consumer make the choice. Hydron, an eye care brand, established mobile stations in low tier cities’ which offered eye examinations and eye health communication for students. Hydron built its brand image through its exceptional consumer education efforts and was selected as one of the “Most popular brands” by college students in China. Another brand which has done consumer education rather well is Nokia - which opened a number of small shops in over 600 prefecture-level and county-level cities. These shops also offer product demonstration to help consumers better understand the product capabilities and accept its price.

4. Localize marketing programs. Localization of the marketing programs is warranted from several perspectives:

- Firstly the media environment is different, with the role of outdoor media, outdoor activities and social intercourse in public areas such as the public square being higher

- Secondly in order to develop credibility at the local level, the retail stores need to develop and demonstrate local support and roots. Enlistment of local well known personalities need to supplement the use of international and national spokespersons or communication. Local dialect is often used by retailers to strike a chord with the population.

- Lastly traditions and festivals play a greater role in smaller towns and cities and hence provide a greater opportunity to leverage for sales promotion.

Localization is required not just for the marketing activities but even for the product range itself. An example of a retailer which has very successfully used local marketing is Ling zhi or Bestseller Company whose brands include JackJones, ONLY and VERA MODA. Ling Zhi's annual revenue in China has increased by an average of 20% a year in the past 3 years. It has more than 3000 shops in China and around 1000 shops are in Tier3 or Tier 4 cities, and a few hundred even in Tier 5 cities.

5. Make the customer feel at home. 91% of the consumers in small cities said that good staff attitude is a strong factor in their choice of the store. The retailers need to make the shopping environment attractive, but at the same time not too alien - the consumer should feel drawn but not daunted. This is not just about providing excellent service - but it is about making the consumers feel absolutely comfortable in the environment, where they are not shy to interact with the product or the sales staff. A significant number of Chinese internet users comment positively or negatively about brands on the internet and one of the things that makes them comment is their experience of service. There is a lot of positive buzz on the internet nowadays about a girl and her boy friend who had a stormy scene in Hai Di Lao hot pot restaurant. The waiter sent them a card and flowers trying to bring them together again.

6. Simplify. The range of available products in China has multiplied several fold in a short period of time. The number of options that the consumers are suddenly exposed to is bewilderingly large. Behavioral science has told us that "too much choice" is confusing and some times leads to loss of sale. Retailers in lower tier cities needs to strike a balance between offering consumers enough choice so to meet their needs, but at the same time not get totally confused. Shelf displays need to be designed with this objective in mind. Displays can be designed at two levels - with a primary display in the front , and a secondary display to be accessed if the customer needs greater choice. Retailers need to experiment on this count and reach the optimal display configuration for them.

7. Leverage the internet. E-commerce has penetrated well into China's lower tier cities. In fact one of the reasons why lower tier consumers do online shopping is because premium and luxury brands are not well distributed in these cities. The success of Taobao in lower tier cities bears a great testimony to this. We also know that while online shopping is attractive to consumers, there are also certain barriers. Most importantly trust, fear about quality or fake products and payment and delivery related issues are thorny points with the consumers. We also know that there is a multi-directional traffic and interaction between online and offline stores which includes online search and offline buying, or offline evaluation and online buying for lower price or any other reason, or even online search, offline examination and finally online buying.

Retailers should develop a concerted strategy to link their offline and online stores. Computer terminals can help the customers surf the online store for greater variety and selection. The retailer can arrange for the customer to order from the online store and pay in the offline store and collect the products. Burberry recently provided all their in store sales staff with an iPad. The staff can use the iPad to expose the consumer to a larger range of products or explain product qualities better.

8. Not just shopping. Perhaps an obvious point, albeit an extremely important one. General attitudes towards shopping are different in China as compared to the developed world, and within China in the lower tier cities as compared to the key cities. Shopping is not a routine chore - but something to be enjoyed and relished. it is a source of entertainment and a shopping trip can be an leisure outing. Consumer attraction to shopping malls will increase if they could add more supplementary entertainment activities to truly make shopping a leisure activity.

Written by Ashok Sethi

Ashok.Set@gmail.com

Mobile Life

2011-06-28T17:30:00.002+08:00

Mobile Life

It is believed that when the Christian cavalry first appeared in the new world the pagans thought that the horse and the rider was one person. Visitors from outer space on seeing the modern humans with a mobile phone glued to their faces, or a blue tooth head set in their ears, could well also think that the mobile phone is really an integral part of our bodies. We surely seem to rely on it almost as much as we do on our organs. We use the phone to talk, send messages, chat with friends, take pictures, read news and books, listen to music, watch movies, and even transfer money. Many would argue no other recent invention has transformed the mankind to the extent that mobile phone has.

It has not just enriched the lives of the well-heeled - allowing them to use Facebook, watch Youtube and read the New York Times on their smart phones, it has empowered the poor in developing countries through countless applications - helping them to use a mobile phone to check the weather forecast to plan the sowing, check prices for their crops and even transfer money to their families and loved ones. To women it has become a safety device, encouraging them to go out and work, while providing peace of mind to their families. Secondly, unlike in many other ways, it is not the West but the Chinese and the Indian mobile phone users who are leading the way in discovering innovative and life changing ways of using mobile phones. Convergence, much talked about in the West, saw more success in the East - emerging market consumers are less likely to be able to spend money on multiple devices and use the mobile device not just as a communication tool - but also as a education device, a personal organiser and as an entertainment centre.

While PCs remain the most frequent conduit to the internet, a large number of consumers in China use a mobile phone to access the internet. In fact a significant number (over 50 million) only use a mobile phone to access the internet, as they do not have access to PC based internet. Mobile internet in developing countries, therefore, is driven by two horses - it is not just the urban rich who use their smart phones to access the net, it also consumers in smaller towns and rural areas, whose only access to the web is through the mobile device.

Understanding how consumers use mobile phones, what motivates their usage and what more do they want to do with them is of enormous importance to those who make the phones, those who provide the service and those who design the applications that run on the phones. The transformation of the phone into a media vehicle makes it of interest to anyone who wants to reach the consumers with their brand messages. This makes the phone of huge relevance and importance to any company and any organisation which has anything to do with the consumers.

While we understand a lot about how and why people use mobile phones, the technology is continuously outpacing our understanding. TNS’ Mobile Life(discovermobilelife.com) is an annual investigation into the mobile market place, in it’s sixth year Mobile Life is designed to keep a constant finger on the mobile consumer's pulse (or rather their thumbs and fingers which they use to do make their phones do the most amazing things possible). Mobile Life measures what consumers do with their phones, how often do they do it, where they do it, when they do it and most importantly why they do it. Understanding the motivations, mood and feelings consumers experience while engaged in various mobile activities is important to understand so that the marketers can match the tone of their messages with the emotions experienced by the consumers when engaged in various activities. In this way the messages are less likely to be seen as intrusive and received more enthusiastically.

What will be the future of this marvellous little device, which helps us bond with other human beings, gives us peace of mind, assuring us of the security of our loved ones, entertains us, navigates us and even helps us earn a livelihood? Mobile Life:GTI is the only truly global study to investigate these areas. With a coverage spanning 42 countries and 34,000 consumers, it offers unparalleled understanding of the consumer relationship - functional as well as emotional - with their mobile devices and a sound basis for a wide range of marketing decisions.

Written by Ashok Sethi
ashok.set@gmail.com

2011-03-17T19:26:00.001+08:00

Down the rabbit hole in the new year

While China celebrated and welcomed the year of rabbit this month, Vietnam was heralding the year of the cat. It seems to be a case of Chinese whispers in which the rabbit got transmogrified into a cat while travelling South, and resulted in the Vietnamese ringing in the year of the furry feline rather than the swifter rabbit.

Journalists who like to compare China with India, will need to note that unlike China there is no single Indian new year, and like the usual diversity in India, the different provinces, communities and religions celebrate their own new year. Comparing the economics of the two countries, and seeing the raging inflation and softening stock market in India, many worry that if it is the year of the hare in China, let it not be the year of the tortoise in India! But some economists feel that India will be the winner in the long run - China's boom could be a case of "hare today, gone tomorrow". Others, however place their bets on China, where sustained investment as well as focussed and efficient governance continues to drive the country towards new economic achievements and providing a better quality of life to its citizens.

The greatest human movement in the world in China (called 春运 chun yun or spring transportation) triggered by the new year, in which over 300 million migrant workers and others working away from their homes, head back to be united with their families, often results in anxiety and frustration. The eagerness or even desperation to get home, particularly pronounced among the migrant workers who have often left their children home in the care of their grandparents, is particularly pronounced. The competition for train tickets is particularly fierce and media has been full of stories of people queuing overnight only to be told when they reach the ticket window that all tickets to their home town are sold out. One sufferer of this fate was Chen Weiwei, who is utter desperation and frustration at failing to secure a place on the train home, stripped himself naked in the ticket office, forcing the authorities to provide him with tickets for him and his family. How were the authorities able to produce the tickets, when the ticket windows declared them "sold out" was a subject of much speculation in the Chinese blogosphere.

To the marketer, Chinese new year is the time to ease the consumers of their hard earned money, particularly exploiting their desire to return home laden with gifts for their parents, children and extended families. A health product called Nao Baijin, particularly exploits the sentiment urging consumers to buy super large, decorative festival packs of the magic pills to gift their ageing parents. Other marketers use the occasion to reach out to the consumers with promotions (as successfully done by the search engine Baidu - asking consumers to search for "hong bao" or the "gift envelop" to participate in a contest) or ride on the emotional bliss of uniting with or communicating with the loved ones (as done by QQ - China's most popular internet messenger).

While going home to meet parents can be joyous occasion, some young people also dread the parental inquisition and pressure for tie the knot and produce a grandchild for the parents to look after. Some have started resorting to hiring a member of the opposite sex masquerading as a potential marriage partner to ease the parental pressure. The phenomenon of hiring a girl friend to take home for Chinese new year, so that the parents are assured that their son is well on its way to a life of stability and marital bliss, inspired a new television series called "Zu ge nu you hui jia guo nian" or "Hiring a girl friend to take home for new year".

Written by Ashok Sethi, TNS China
ashok.set@gmail.com

Chinese consumers in 2010

2010-12-24T16:25:00.000+08:00

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

Ashok.Set@gmail.com

The Chinese Lap of Luxury

2010-11-29T10:28:00.000+08:00

While the sinking finances of Western consumers prompted them to temporarily halt their indulgences in 2009, the Chinese consumers continue to march ahead on the gilded road of luxury and rewarded the luxury goods industry with a 20% growth for the year. The boom is further magnified this year - large new stores of Louis Vuitton, Coach and other such brands decorate the shopping streets of Shanghai and China is expected to show a 30% growth in luxury goods in 2010.

While rapid economic growth and swelling ranks of the rich are definitely fueling the market, there are also clear cultural factors which make the Chinese more attracted to luxury products than some other markets. The old Chinese saying "yi jin huan xiang" (return home in golden robes) expresses the phenomenon of using visible symbols to reflect your success. Having succeeded, it is important to make sure that your achievement is noticed and applauded. But at the same time traditional Chinese values do not suggest sticking out or drawing undue attention on oneself through conspicuous behavious or consumption ("qiang da chu tou niao" - the bird who sticks out his head gets shot!). Why then are the Chinese consumers lapping the expensive symbols of luxury? Apart from economic and cultural factors, I feel that there are a few other elements serving as psychological fuel for the luxury market in China.

1. Universality of ambition and common standard of evaluation of success. In China there is near universality of ambition - almost every person dreams of and strives for success. As compared to other societies which are more class based (social or economic), and people blessed or cursed by advantages and disadvantages of coming from specifc backgrounds or bloodlines, the relatively flat social structure and the fact that all money is "new money" puts everyone on a relatively equal footing in their endeavour for success . In a similar vein, not many symbols of success or achievement are available to display as the absence of "background" provides little opportunity to display your success other than through the symbolism of whatever your new money can buy. Luxury goods provide easily recognisable symbols or markers of having reached certain milestones.

2. The simple perception of money. In China the history of branding and availability of quality goods is rather short. Over the last 20 years, Chinese consumers have discovered that money generally buys superior quality and hence expect the expensively priced luxury goods to deliver matching value. Chinese attraction to luxury products, therefore, is driven by an expectation of high quality. As an implication, for luxury goods manufacturers, it is equally important to ensure and deliver product excellence and exquisite craftsmanship, as it is to project a luxurious and exclusive image.

3. Lack of inverted snobbery. In China, there is no inverted snobbery or "old money" looking down on the ostentatious behaviour of the "new rich", which discourages the use of luxury products and in fact makes it fashionable to appear casual and use moderately priced products. This sentiment restricts the market of luxury goods in developed markets, but because of the relative homogeneity of the society (e.g. all money is new money) does not appear to make a strong dent in China.

4. Absence of price anchors. Dan Ariely in his book "Predictably Irrational" talks about the concept of arbitrary coherence. We tend to assess the value of goods and services in relation to certain anchor benchmarks or comparison standards (which some times can be quite arbitrary and irrational). In countries like India, which are also booming economies, but where there has been a historic continuity of consumption, the consumers have grown up with products and services which were low priced but still delivered acceptable quality. In relation to these historical anchors it is more difficult for Indian consumers to accept the high prices of luxury goods, But in China where there was a long discontinuity in consumption of quality products, many consumers have no anchor of what a good quality hand bag, watch or a car should cost - making it easier for them to accept the high prices of luxury goods.

These factors combined with China's rapid economic development and cultural factors provide a potent mix, resulting in a resplendent display of luxury and a great market for purveyors of these pleasures.

Written by Ashok Sethi

Ashok.Sethi@gmail.com

China surpasses Japan as the second largest economy in the world

2010-08-02T08:17:00.000+08:00

China surpasses Japan as the second largest economy in the world

China’s economy grew 10.3% in the second quarter of 2010 - to reach $ 1,33 trillion. Japan in comparison grew 0.4% to reach $1.28 trillion. It would seem to imply that China has now overtaken Japan to become the second largest economy in the world. The media has touted it as another feather in China’s cap and has reported it with a mix of grudging admiration and trepidation. Zhang Lin, a young conscientious journalist decided that objectivity was in order, and decided to seek the views of a cross-section of people to this apparent milestone.

The first stop was at a prominent university in Beijing. Professor Xiao, head of the department of philosophy in a leading university remarked, ” If you really think about it, this landmark is of little consequence or importance. It is as meaningless as any of the other comparison or achievement standards that we set for ourselves (most of which seem to be well rounded numbers as hundred billion, one trillion and so on). It is a creditable achievement that China’s economy has been consistently on the rise and China has been able to lift millions out of poverty and give a large proportion of its citizens a decent existence. But it is entirely irrelevant that it has surpassed Japan or any other country in economic might.”

Zhang Lin’s eyes shone as she heard the professor. “How true!” she thought. Why do we need to always think in terms of benchmarks and milestones? Let’s look at what it really means for the lives of the Chinese people. “I need to check how does the common Chinese man (or woman) react to the news.” Driven by this thought she decided to take a train to the hinterland and talk to some Chinese farmers.

On the way out, Zhang Lin was tempted to knock at the office of the head of the economics department. Professor Zheng’s furrowed brow suggested deep cogitation. “China is the most populous country in the world,” the professor said. “It is expected that if it continues on the path of growth it will assume one of the top slots sooner or later. The fact that it is larger than Japan is of no consequence as Japan only has one tenth of China’s population. China had edged past the economies of France, Germany and UK which it surpassed in its stride in the last 3 years. In fact if China continues to grow at this pace, it will also overtake the US and become the number one economy in the world in 2030 or earlier.”

Wang Lan a farmer in the Henan provinve was ploughing his field when the Zhang Lin approached him with the news. “Shushu (uncle),” the reporter said “China has overtaken Japan to become the second largest economy in the world. What do you think about this news?”. Wang Lan looked at the reporter with a mixture of amusement and bewilderment and burst out “I hope my crops don’t get eaten by the floods and I can get a good yield. May be better than they get in Japan!” 720 million rural residents of China still have an average per capita income of less than a thousand dollars a year. Every year they eke out a meager living in face of drought and floods. China’s challenge is to make the growth inclusive and broad and improve the lives of its still large rural population.

When Liu Xing, a worker in the toy factory in Dongguan when informed of this achievement said, “I get RMB 1000 per month in the factory, how much does a factory worker in Japan get?” It is estimated that 150 million migrant workers from rural areas work in large cities of China. While wages in China are increasing, clearly their incomes and living standards are far from the standard of living in Japan or any of the other economies that China surpassed in its stride in the fast few years. When you look at it on a per capita basis, the fact is that China only has a per capita GDP of $3,800 as compared to Japan at nearly $ 40,000 and the US at $ 43,000. Clearly China has a long way to go if it needs to provide the same standard of living that Japan and US have been providing to its citizens,

What is of importance is whether China will be able to sustain the momentum and continue to grow at this pace for the next 30 years so. Even more important is the question whether the growth will be inclusive, embrace the poor farmers and the migrant workers and not destroy the environment.

Economic power is often equated with political might. With the second largest economy in the world, is China the second most powerful nation in the world, should the world fear China and put up defenses to protect itself from the juggernaut that’s China ? Professor Wang at one of the local universities in Guangdong did not seem to think this way. “China becoming the second largest economy in the world does not imply that it is has become the second most powerful nation in the world or the second most influential country. Economic might and a large consumer base gives you bargaining power for trade, large foreign exchange surpluses provide you with an investment muscle to further progress your interests in other parts of the world but does not put a crown on your head and make you a figure of either fear or admiration.”

In another part of the world Sarah Palin, the failed Republican candidate in the last American presidential elections took the call from Zhang Lin and said on the telephone “Senator McCain and I would have never let is happen if the Americans had voted for us rather than Obama. Today the second largest, tomorrow the largest – where will it stop? I have four children and none of them speak Mandarin. And I don’t want them to be looking for jobs in Shanghai. I hope Obama will do something.”

President Obama’s office chose not to respond to the development or Sarah Palin’s remark. Inside sources say that the White House is carefully evaluating the consequences of the development and will respond “as appropriate”.

Written by Ashok Sethi

Ashok.Set@gmail.com

Social Media in China – Great Expectations

2010-07-24T22:33:00.000+08:00

Social Media in China – Great Expectations

Great expectations

Perhaps no other recent phenomenon has generated as much expectations among marketers as social media. Fazed with increasing clutter and deteriorating ROI from their investments in conventional media, marketers are salivating at the thought of social media providing them with an opportunity to link up once again with the increasingly elusive and promiscuous consumer. In a research conducted by TNS among marketers in China, a large proportion of them said that social media is one of the most effective marketing tools today. In fact there is a common perception that social media is on its way to replace more and more of conventional media.

However the marketers are also clear that the potential offered by the media is far from realized today – in fact they feel that only a fraction of the potential of social media is tapped today – because “very few companies understand social media”, “the social media scene changes so fast that it is difficult to keep up”, “there are so many options to chose from” and lastly a complaint that their organisations are not able to find right agency partners or vendors to work with.

Vibrant social media on China

There is no denying the fact that social media has been growing rapidly. Specialist social networking sites such as – renren.com, kaixin001.oc, qzone.com and 51.com. have gathered a huge following in the last one or two year. If you consider other parts of social media such as blogs, bbs and video sharing nearly everyone is involved. Why is there such a powerful social media landscape in China? Why has social media exploded in China?

The key to answering this question lies in understanding the way the Chinese consumers look at the Internet. In the developed economies, consumers look at internet as a work tool, to increase efficiency or provide information. However, the Asian countries like China and India also look at it as a tool for self-expression. The fact that traditional forums for discussion and airing your views are scarce is a definite encouraging factor. Often debate and dispute is not possible at home – as many of the young people don’t have a sibling to fight with! It is not surprising that Chinese consumers are among the biggest bloggers in the world.

What has marketing got to do with this?

While it is interesting to know and acknowledge that people in China are fond of interacting socially with their friends and colleagues online, like to discuss juicy topics (like how well dressed is Xili Ge is, or about Furong Jie or the spicy details of the Shoshou Men), we need to still evaluate its relevance for brands. The relevance for brands comes from the fact that people are discussing about products and brands online. According to a TNS survey 86% of the social networking users have come across a negative comment on a brand online. Marketers have to be there to defend themselves. But it is not just about crisis management. 90% of the consumers we talked to have come across a positive comment online for a brand – pointing to the tremendous opportunity that the media offers to brands. It seems apparent therefore that people are talking about brands on social media – some are saying good things about brands, some are saying bad things about brands, Marketers can take of the risk of ignoring it or the can try to see how this can be monitored, moderated and veered in the positive direction.

Why do people talk?

The reason marketers are excited about social media is that they feel they can engineer positive conversations by persuading consumers to sing paeans about their brands. However, the major trigger for positive word of mouth is a high degree of consumer satisfaction. Consumers want to share their happiness from consuming wonderful products, or relish their gratifying experiences. So the best way to make them talk is to delight them. Another interesting trigger is the possibility that either a new brand or its advertising catches their attention. So every time marketing has something new to talk about, there is an opportunity. Hence triggering positive word of mouth can only be based on a sound foundation of solid product performance and genuine newness – it can not emerge out of nothing.

Mismatch of expectations and reality

The views of the marketers about social media are very clear and they see a distinct role for the medium– they expect social media to create WOM (word of mouth) or buzz and do strengthen the emotional bond, which is very different from that of conventional online advertising. While the role of social media is seen to strengthen the emotional bond and to develop loyalty, conventional online advertising has the job to create awareness and to inform (essentially the same job as that of advertising in traditional media such as television, but without TV’s ability to enhance image). Hence there is an expectation that because marketing communication works in an environment of social interaction, warmth and bonhomie, it will have a more profound effect on the consumer psyche than conventional advertising. But is it really so?

If you ask the consumers – there seems to be a mismatch , the consumers say brand exposure on social media makes them aware of the brand – put it into the consideration set – even nudge me to try it - but generating loyalty and bond with the brand - a bit unlikely. This indicates a gap between the marketers’ expectations from social media and the reality – which for us is a cause for reflection. Are we using social media appropriately? Is it that quite often marketing communication on social media websites is actually conventional advertising, and makes little attempt to engage the consumers or to generate a dialogue? It seems clear that if the great expectations from social media are to be realized, marketers and their consultants need to work harder in imbuing their brands’ presence with a character that connects more intimately with the consumers.

Written by Ashok Sethi

Ashok.Set@gmail.com

Smile please

2010-04-20T12:33:00.000+08:00

Smile please

Chinese standardization

As I reached the boarding gate at the Beijing airport, the lady from the airline took my boarding card, momentarily glanced at it and passed it to a colleague standing next to her. Her colleague in turn put it under the scanner, and passed it to the third colleague. The third colleague decorated the card with an artful squiggle with her pen and waved me on, as a disembodied recorded voice expressed the airline’s gratitude at my patronage by saying “xie xie”. Further down near the aircraft, another airline staff member tore the boarding pass into two, passed it to the security man, who planted another squiggle on it and I entered the aircraft.

The Chinese service model seems to be based on the principles of assembly line of the manufacturing process in which the Chinese clearly excel. The service is divided neatly into different processes and a standardized delivery of a basic quality is designed to be made for each element. Standardization rather than customization is the goal. “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. The taxis in Shanghai belt out both a welcome and a farewell message, both in Chinese and amusing English ( including reminding you "not to forget any belongings you take"). Does the recorded message achieve the service provider’s intention of making the customer feel valued or does it actually devalue them and makes them feel like cattle? In my view the Chinese airline process of handling the passenger and his bags seem to be quite similar – perhaps they do not play the “thank you” recording to the bags, and not physically shove the passenger on to the aircraft (thought he Shanghai Metro has hired people who stand at the platforms at peak times and do push the passengers on to the trains).

Customised Indian model

The Indian service model, on the other hand, is based on the concept of customised service. Several factors will influence the behavior of the staff at the counter - which may include how her mother-in-law treated her in the morning, whether she got a seat on the bus to the airport and even the quality of the tea that she had in the canteen. 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 behavior 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. Indian model could do with a bit of standardization - though perhaps not a talking machine.

The Japanese way

The Japanese are of course, known for their high standards of manufacturing (Toyota recalls not withstanding) as well as service. The Japanese service combines the Chinese standardization, with an Indian customization and intimacy, without the class discrimination. While the service is still performed by humans, machines are used to monitor the level of the delivery. Computers and cameras check the level of curvature of the smiles of the service staff at the Keihin Electric Express Railway Company, to check if the smile is wide enough to infuse the customer with the required feeling of warmth.

Some may feel that the installation of smile scanners is a step too far. Nevertheless, both the Indian and the Chinese service models need to learn a great deal from the Japanese and I would strongly recommend that the Japanese smile scanners be installed at all airline counters in both India and China. But I fear that the Chinese solution may be to replace the current voice tape recording with a video recording, showing the smile of a machine monitored Japanese employee! And the Indian solution? May be the staff will only switch on the scanner when they do feel like smiling.

Written by Ashok Sethi

Ashok.Set@gmail.com

Who will replace the American consumer?

2010-03-09T19:00:00.000+08:00

Vacancy for the top slot

Robert Zoellick the president of the World Bank is leading a global search for the replacement of the American consumer. The American consumer served the world well over the past decade. They bought in large quantities, extravagantly and indiscriminately. They bought regardless of where the product came from, what it did for them and whether they had place in the house to keep it – which led to their having to buy larger and larger houses to keep the things that they bought.

The workers in far off lands of China, India and Africa toiled away in Dickensian conditions to satiate the American consumer demand. They worked 12 hours a day in sweltering workshops, with no overtime or social security to provide affordable goods to American consumers, who in turn obliged by consuming prodigious quantities of them. However, it is felt that American consumer can not do an encore of this remarkable performance in the coming decade. A desperate need exists to find a replacement. Someone, who could continue to fuel the global growth that we benefited from in the last decade – or else the world faces a recession.

The Chinese candidacy

In a number of circles the name of the Chinese consumer is being whispered as a possible candidate this role. Can the Chinese consumer spin the same magic as the American consumer and keep us on the growth trajectory? The advocates for designating the Chinese consumer as the replacement of the American sustainers of world economy argued, that the fact that there are four times as many Chinese as Americans is a good starting point and makes the Chinese consumer a good potential candidate. “But they don’t even have one tenth of the purchasing power,” argued Robert Zoellick. “That money is required to make a purchase, is an old-fashioned concept and is has been clearly demolished by the American consumer,” argued the advocates. Anyway money is a nebulous concept, we have seen trillions go here and there and none is wiser as to why and where it went and how it seems to be re-appearing again. What we do know is that when it re-appears it does seem to gravitate to the bonus packages of the American bankers. In fact sometimes it reaches the banker even before it reaches the bank, which itself needs to be kept afloat by funding from the State.

The clinching argument came from those who triumphantly revealed that it was anyway the Chinese money that the Americans were spending. Hence it wasn’t really the American consumer but actually the Chinese consumer who was providing the growth to the world economy. The Chinese consumers toiled in sweatshops and gave a part of their hard-earned money to Americans who used it to buy the goods that the Chinese workers sweated to produce. So it all worked out quite well – Americans did what they did best and are known for, and the Chinese did what their culture and tradition guided, giving them satisfaction of following their values of hard work, thrift and moderation.

Then why bother to change? Change will mean that both Chinese and American consumers will need to go against their grain. Imagine embarrassed and flustered Chinese moving through the supermarket aisles and staring at large packs of frozen dumplings or dried beef that they know they will not be able to eat, or looking at toys for their only child who they know does not need any more. At the same time, American consumers having to change their perception of a bank to a place where they save their money than where they borrow money from (and take out sub-prime mortgages from), is also an uphill task. Given the current image of the banks and the federal bail-outs, how will American consumers have the heart to trust their own money with a bank? For decades they have been guided by a belief that it is better to have the bank’s money with them than have their money in the bank and it will not be easy to change this principle which has served them so well over the years..

Status quo

Still immersed in deep reflection, Rober Zoellick concluded,” The solution is status quo - and even more status for the Americans and more quo for the Chinese”. Let Chinese workers labor more and produce even cheaper and better goods for the American consumers. Let them lend more money to their American brethren so that they can continue to stuff their large houses with more toys, electric drills, synthetic carpets and dildos made by Chinese factories. Only the Americans have houses large enough to accommodate more shopping any way.

President Obama congratulating Ben Bernanke on being the Person of Year for the TIME magazine for 2009 said, “Ben, you do us proud. You have done well so far. If you need more money – go East, young man. Work closely with your runners up in TIME magazine – the unnamed Chinese worker – and you might just save the world.”

Written by Ashok Sethi
Ashok.set@gmail.com

Shoe for a shoe

2010-01-28T22:54:00.002+08:00

Jail term for a pioneer

Wiser counsel seems to have prevailed. Muntadhar al-Zeidi, condemned for three years in Iraqi jail for throwing shoes at George Bush is out in six months They pronounced a three years sentence for a brave visionary who tried to change the world through innovative thinking! If we need to put Al-Zeidi, the Iraqi hero for flinging his shoes at George Bush behind bars, why not put all the marketing gurus and most of all Philip Kotler in jail, whose text book of marketing management clearly describes the marketing strategies of market expansion and product extension.

Saviour of soles

The shoe factories in Guangdong province of China were reeling under the impact of financial crisis. The anguished migrant workers losing their jobs and dreading the prospect of being reunited with their families in their rural abodes were desperate. “Stimulate domestic demand as a substitute for exports” cried out the venerable economists, eager to give advice and bring succor to the lives of the affected poor in export reliant countries. But can even the 1.3 billion Chinese consumers match the demand created by Americans, who on an average used to buy 30 pairs of shoes in a year!

It was a remarkable demonstration of the innovative thinking that the Guangdong Shoe Export Association hired Al-Zeidy to throw a pair of shoes at George Bush and demonstrate a new use for the product to boost its sagging demand. Imagine, if people started throwing shoes as well as wearing them? With millions of appropriate and deserving targets and billions of potential throwers, the factories can open their gates again and the workers can get back to the task of stitching the uppers to the soles. The Chinese government’s buy-in and support was secured, and the Prime Minister Wen Jia Bao himself volunteered to be the spokesman and a target for shoes in Cambridge University earlier this year.

A whole new world

Special shoes will be designed for bankers, made from sub-prime materials and leveraged at the heels. The politicians will get thick leather shoes to match the thickness of their own hides. The insurance companies will get shoes, the risk of wearing which will match the risk profile of the assets that they insured. We could even get rating agencies to rate the shoe in terms of aerodynamics, the speed and distance to which it can travel, and how much it will hurt when it will hurt the target.

The market could be segmented both by the thrower and the throwee – stilettos for the highbrow, the humble canvas shoe for the amateur, sneakers for the nimble, athletic types and budget shoes for those on a shoe-string. Shoes could be color coordinated for maximum impact – black shoes for Obama, white for Bush, brown for Manmohan Singh and yellow for Wen Jiabao.

Shoe for a shoe

The mind boggles at the opportunity, if the principle of “a tooth for a tooth and a nail for a nail” could be extended to “a shoe for a shoe”. The great leaders and the eminent public speakers, would then come to the meetings equipped with their own set of shoes, to fling them back at any miscreant who dares to throw one at them. Imagine public meetings, in which shoes are flying like rockets in each direction and every swing contributing to the rescue of shoe industry in Southern China, and ultimately to the rejuvenation of the global economy.

“Let me make it very clear,” president Obama said. “White House will not abandon the view that a shoe is a wearable accessory, whose primary role is protection and adornment of the feet. However, if it can find additional utility as a saviour of the global economy, I am sure Secretary Geitner will welcome it with open arms.”

In Dongguan in Guangdong province of China, as the shoe factory worker Lian Ping uses his chopsticks to voraciously swirl multiple strands of noodles from his bowl to his mouth, he can be rest assured that his next bowl of noodles or rice is not imperiled by the lack of demand of shoes in the world. He has to thank Al-Zeidy for this - who would not have spent six months in jail for nothing – he would have saved our soles.

Written by Ashok Sethi
Ashok.set@gmail.com

What the current environment means for fine tuning marketing strategies in China

2010-01-12T15:43:00.001+08:00

There is no time in China like today. On one side it is buffeted by the tsunami of global economic crisis, on the other side its consumer base is rapidly increasing in size and value. How can marketers make the best of this unique juncture in time and deploy the most effective strategies for establishing a firm position in China.

Presented below ten strategies that the marketers can consider to thrive in these times.

1. New strategies for new times

The changed economic conditions is affecting consumer behaviour and attitudes. Can the marketing strategies based on the understanding of the consumers in the prosperous times still hold water now. Consumers are changing their behaviour in several different ways and various underlying attitudes and values govern these changes. It is critical for us to re-look at the consumer and refresh our understanding to fine tune the marketing strategies.

2. Segment and decide

Not all the consumers react to the environmental changes in the same way. Different consumers have different reactions to the financial challenge – ranging from an extreme tightening of the purse-strings, to a nonchalant continuation of the current indulgences. Tightening may be reflected in different tangible and psychological ways. Manufacturers also need to offer a range of different solutions and propositions to meet these changes in behavior.

Additionally, different consumer segments may be affected to different extent – and growth may vary from segment to segment. In luxury goods, for example, connoisseurship and indulgence segments may grow more as compared to the pure status segment, as these consumers’ relationship with luxury segments is not only emotional but also very tangible.

3. Find new pastures

In these times, growth may be easier to come about through geographical expansion, than competitive fight in the current markets. The impact of the slowdown is more pronounced in larger cities – though the smaller towns and villages are also affected if they relied on export based industries. Hence while growth may be challenged in the larger cities, it may be a good time to set forth and explore new markets in county towns, townships and villages. These are the markets which are growing at a faster pace and offer greater return for investments.

4. Emphasize value – re look at your brand portfolio

It does not take rocket science to conclude that in these times the consumers will look for value. The challenge is to offer value without compromising the image. There are different strategies to deliver value – some are appropriate and some ill-advised – some will damage the brand equity permanently, some will keep the image intact but still help adjust to the times. Research shows that direct price reductions are likely to damage more than temporary discounts, and decreasing pack sizes more harmful that increasing pack size at the same price.

5. Look at your distribution channels

A strained economic situation not only changes the consumer, but also changes the shopper. Consumers are normally more attached to the brand than the retail store, hence their first choice is not to change the brand, but try to locate the same brand at a cheaper price at another store.

With more time at hand and greater incentive to economize, more consumers are likely to shop at hyper markets than the more ubiquitous but pricier supermarkets and convenience stores. The search for value and bargains will also turn the shoppers to internet shopping–the only channel that will grow even faster than hypermarkets

6. Help the consumer – teach her, train her, comfort and reassure her

Research indicates that Chinese consumers’ response to the economic challenge is cerebral. When opportunities are fewer and the competition more fierce the Chinese consumers will want to further enhance their skills and knowledge. Clearly it is very good news for companies teaching English or computer programming. But the opportunity is not confined to these firms – the FMCG industry could also take a more educative communication stance - wine makers could try to educate the consumers about appreciating fine wines, cosmetic companies could offer lessons on skin care and food companies could coach on diet and nutrition.

7. Family, home and security

When the going gets tough, the consumers tend to take comfort at home and in the arms of the loved ones. Recession is the ideal time to catch up with friends, take the children to the park and visit the parents, and in the process enjoy emotional warmth to compensate for the coldness of the economic climate. The children are likely to pay a heavy price for this, with parents having more time and inclination as well as a renewed determination to help their children with their studies. This offers opportunities to promote in-home consumption, rather than out of home consumption – which in many categories such as alcohol, is much more expensive.

8. Communication

It is not just the product but also the message which needs to reflect the current consumer mind. The communication messages of today needs to reflect sentiments of care and protection, rational and considered behaviour and performance and value These tones of communication, which always appealed to the Chinese consumers, are likely to find even greater resonance in these times.

9.. Go digital

For the largest internet population in the world, internet has so far been a tool of entertainment and information – less so a tool for commerce. However the initial barriers are being overcome and consumers are discovering the joys of internet shopping. The attributes consumer associate with internet shopping are variety, enables detailed evaluation and comparisons and competitive prices. These are the attributes the consumer will be looking in the times of economic slowdown.

10, Keep a permanent hand on the pulse of the consumer

These are dynamic times. Things are changing at a phenomenal pace. As a result, so is the consumer mood and sentiment, which will have an effect on her decision making and the brands and products that she buys. If marketers don’t feel her pulse all the time, they could go wrong. One can not just listen to the consumer once a year - marketers need to put their ears firmly on the ground and listen to every change of beat, every nuance of the consumer mood and continue to fine tune the strategy.,

Published in South China Morning Post, July 27, 2009
Written by Ashok Sethi, TNS China

Ten Consumer Behaviors and Trends to Watch During Economic Slowdown

2009-05-05T17:01:00.001+08:00

The consumer mood today

Marketing pundits believe that condoms, DVDs, lipstick and junk food are likely to gain prominence during economic slowdown. Will Chinese consumers’ behavior be similar in these times of strain? TNS China conducted a study in urban China to validate or explode these hypotheses and myths and we present here the key changes that we can expect in consumer behavior in these difficult times in urban China.

On the whole, the urban Chinese consumer is facing the crisis with stoic optimism. Half the consumers feel that despite the downturn their incomes in 2009 will actually increase in comparison to 2008. 31% expect to retain the 2008 income level and only 19% expect a decline. The optimism is based on the fact that most consumers feel that their lives will only be slightly singed by the fury of the global economic meltdown. However on the whole the year 2009 for the Chinese consumer will be a time for reflection and an opportunity to seek a balance in life – balance between work and play, friends and family, saving and spending, excitement and peace – in their quest to seek a better quality of life.

1. Health is wealth

When the wise man propounded that “health is wealth” he possibly did not expect that we may one day have a time when health is the only wealth that people possess. In a situation you can do little about the economic health, it becomes even more important to preserve the physical health. While gyms should still have their treadmills rolling strong as enthusiasts try to match their body weight graph with the stock market trend, most consumers will adopt the natural and free exercise of walking and jogging in their quest for healthier and slimmer bodies.

2. Goodbye luxury

“It has been said that man is a rational animal. All my life I have been searching for evidence which could support this,” said Bertrand Russell. He would possibly be pleased with the consumer desire to rationalize their spending and cut down on luxury goods in 2009. Consumers say that they plan to spend less on jewelry, bags and watches in 2009 as compared to 2008. The luxury goods manufacturers who were expecting China’s appetite for luxury to make it the largest market in the world, would need to wait till the economy turns around.

3. More skin-care and colors

Beauty may just be skin deep, and the recession is deeper. But the Chinese consumers still feel that a glowing skin and luminous lips could act as a shield against the pain of the economic crisis. Need to look good is never more pronounced than when the times are tough. A heady feeling from a positive reflection in the mirror and admiring glances from friends and colleagues could almost match and even compensate for the lightness of the wallet.

4. Skill enhancement and training

American consumers may have over mortgaged their houses, but the Chinese consumers will never mortgage their future. Learning has always been seen in China as a ladder of success. Dealing with difficult times calls for enhanced skills and capabilities. What could be a better time to invest in self enhancement than when employment is scarce, the salaries are low and the work load light. English language courses, already a booming business will get a further fillip. Consumers will try to teach themselves software, web page designing, and even belly dancing to enhance their chances for fruitful employment and a healthy pay check.

5. Digital world

With nearly 300 million internet users (the largest in the world) China was already hurtling towards a digital age. The rapid adoption of the digital media, of course, precedes the recession. Internet is where the Chinese go to look for a better job, download free movies and songs and just engage in incessant chatter with friends. In times like these, they expect to rely on the net even more to search for a better job, complain about their poorly paid jobs in their blogs and upload videos for their temporary leisurely existence. We believe the recession will further enhance the role of internet in the consumer lives in China. The availability of relatively inexpensive 3G mobile services will definitely also facilitate greater adoption and usage.

6. Home sweet home

The joy of family life will be further enhanced and family relationships will be even more delicious with the flavors of home cooking wafting from the kitchen. Chinese consumers plan to cook more at home in 2009 than they managed in 2008. The competition to home cooking comes from cheap fast food restaurants and road side stalls – both of whom are likely to lose business from this segment in 2009. However, the overall business of McDonald’s, KFC and Nan Xiang Xiao Long dumpling chain store may still see an increase in 2009, as consumers also down trade from more expensive restaurants.

If you need to spend more time at home, it also makes sense to vacuum the floor and tidy up the place, Chinese homes are going to look much more neater in 2009 and the lower toil demanded by the workplace may be substituted by efforts at home.

7. Shop wisely

While shopping at hypermarkets has its attractions, it does call for time at hand, With more time and greater incentive to economize, more consumers are likely to shop at hyper markets than the more ubiquitous but pricier supermarkets and convenience stores. The search for value and bargains will also turn the shoppers to internet shopping – the only channel that will grow even faster than hypermarkets.

8. In-home entertainment in, out-of-home entertainment out

When the slow speed of the internet connection makes downloading a movie difficult, we in China have the option of spending a dollar to buy the pirated DVD. If we did want to make an evening out of it, with popcorn and all, we would spend thirty dollars for two tickets in one of the many multiplex cinemas. While conventional wisdom suggests many alternative uses for the thirty dollars (including putting under the mat for a rainy day) the consumers are unwilling to give up this pleasure. Cinema ticket sales are likely to remain high, as long as the movie industry can come up with compelling attractions to help the consumers a few hours of blissful escape from the harsh reality.

Bars and karaoke flourish in economic booms, when clients are entertained and deals are made on favorable terms with suitably mellowed potential business associates. Not unexpectedly the recession will mean that entrepreneurs and managers do not have to listen to potential business partners sing out of tune, in the hope of securing a juicy contract. Less cognac will be poured (sale of beer and other cheap alcohol consumed at home or low priced eateries is unlikely to be affected).

9. Social harmony of a kind

Absorbed in the relentless wheels of economic activity, the Chinese consumer has been accumulating a feeling of guilt for neglecting the immediate as well as the broader family. Recession is the ideal time to catch up with friends, take the children to the park and visit your parents, and in the process enjoy emotional warmth to compensate for the coldness of the economic climate. The children are likely to pay a heavy price for this, with parents having more time and inclination as well as a renewed determination to help their children with their studies.

10. Sex and Love

Chinese consumers do not really plan to change their sexual habits during the recession. However with a strong intention to spend more time with spouse or partner, the consequences can not be predicted!

Some consumers, however, may be forced to give up expensive mistresses, particularly if they continue to demand luxury jewelry and handbags. The demand of condoms, may go up slightly as couples decide to postpone having a child till after the recession. Though as a counter trend, some women are said to be rushing to have a “financial crisis baby” as the law prevents the employers from laying off pregnant women and nursing mothers!

The Shanghai Adult Toys and Reproductive Health Exhibition attracted 20% less exhibitors (pun intended) this year. Is it that the industry which specializes in providing stimulation, is itself in need of a stimulus package! These are hard times indeed!

Written by Ashok Sethi, TNS China

Country road, (don’t) take me home

2009-03-16T15:44:00.002+08:00

The reluctant march home

Twenty million migrant workers from the Chinese countryside, who have lost their jobs in the aftermath of the global financial crisis, do not wish to go home. Driven by the export boom, nearly 130 million rural Chinese had left their farms to toil in urban workshops and construction sites, sending money home to supplement the meager agricultural income. Unfortunately last year the Wall Street brought down the Main Street, which in turn resulted in the closure of factories in China which churned out products enjoyed by American consumers with borrowed money. Last month the Chinese government revealed that 20 million of these workers have lost their jobs and will possibly need to return to their rural homes.

The workers do not want to go home as their income from tilling their small farms is woefully inadequate to provide them with a comfortable existence and even a modicum of savings and security. The per capita rural income in 2007 was less than one third of what the urban Chinese enjoyed. Despite the harsh conditions of work and stay in the cities and the emotional pain of living separately from their loved ones, they willingly accepted this existence to be able to provide their families with a better quality of life.

The official deliberations

Not surprisingly, the welfare of these migrant workers and the economy in general was salient in the deliberations of China’s top legislative body (National People’s Congress or the NPC ) and the top advisory group (CPPCC) which meet every year in Beijing around this time. As can be expected in China, scale is important and the meetings are held with great pomp and ceremony. The sheer size is staggering – NPC has nearly 3000 deputies, and the CPPCC National Committee has 2,235 members. Unlike the House of Lords in UK and the Rajya Sabha in India, attendance is high even in the advisory body and members are expected to remain awake during the proceedings. The publicly released pictures of the meetings show the members in a state of significant alertness, despite the soporific speeches of fellow members and leaders. Previous meetings have debated, modified and adopted other important issues such as the Labor Contract Law and the Property Law. Discussion on China’s economy has always been prominent, but the tone in the past has been congratulatory and exuding pride. Economic achievement offered much fuel for pride in the past (in the 2008 meeting of the NPC the Chinese Premier Wen Jia Bao had proudly declared that China's economy grew by 65.5 percent over the past five years, or an average annual increase of 10.6 percent)

Not only is the agenda this year single-mindedly focusing on economic development, for the first time this year, in recognition of the need of the hour of judicious spending, the agenda of the meeting has been trimmed 10 days from the usual 14 days. The euphoria of a decade long galloping economy has evaporated and the party officials are scratching their heads for how to keep the gravy train going and continue to provide jobs for the laid of workers as well as the new workforce entering the market (including a crop of 5.5 million university graduates every year). The languishing countryside and the widening urban-rural income gap was always an area of anxiety. Guided by this concern, the party leadership in the past raised slogans like “the new socialistic countryside” accompanied by supportive actions such as abolishing the tax on agricultural income. The 2009 meeting clearly recognized that more needs to be done.

The rural stimulus

Research done by TNS in the cities, indicates that the urban Chinese though fearful of the global crisis (63% think that they will be affected slightly and 28% significantly) still sport a staunch optimism. However the rural folks – particularly the migrant workers are already in distress. The workers are obviously not happy to lose an income which they will never able to match with digging the small piece of land back home. They will perhaps be willing to work for even less, driving down the labor prices, and undoing some of the strength they had gained since the adoption of the Labor Contract Law last year. The government is helping out by infrastructure spending in the 4 trillion Yuan stimulus package– including expansion of railways, building roads and housing - much of which will go to rural areas and small towns. It is also trying to boost domestic consumption and cheer the rural masses by offering a 13% subsidy on a range of home appliances ranging from washing machines to mobile phones.

While the new DVD player and a color television may serve as a temporary palliative and help the returned workers while away their time (of which they have no scarcity now) a more lasting smile on their faces can only be achieved through alternate meaningful employment. The workers need an alternative to a miserable though lucrative toil in the cities and leisurely but penurious existence at home. More needs to be done to equip the laid off workers with new skills which make them eligible for other employment opportunities in and around their homes.

Equally important will be to offer them advice, guidance as well as small loans to start village level enterprises which could offer a sustained source of income. Micro-credit, the business of giving small, mortgage free loans in rural communities, which has transformed the lives of millions of peasants in many countries, possibly has a major role to play in China too. The new motorcycle that a rural resident may buy, aided with a newly introduced 13% discount, needs to become a vehicle for entrepreneurship and its engine also serve as an engine for rural growth.

Written by Ashok Sethi, TNS China

Love in crisis

2009-02-18T11:28:00.000+08:00

The importance of being in love

The Chinese celebrate Valentine’s day on the 7th day of the 7th lunar month. As if one Valentine’s day was not enough, the people have also whole heartedly embraced the Western Valentine’s day of February 14, as is evident from the spurt of sales promotions and amorous activities seen around this time in the main cities.

It is not surprising, therefore, that love is important for the Chinese - as high as 98% claim that they have ever been in love. In fact falling in love seems to be easy for the Chinese – 76% believe in love at first sight. Surprisingly the sentiment does not wane with age and the belief in first sight Cupid is as strong among the older Chinese as among the younger. On an average a Chinese has been in love 2.5 times, and 10% have been swept off their feet as many as 5 times. They also start their love life relatively early – two in five first fell victims at the tender age of 18 or even less.

Where love has gone

But the Chinese love story has elements of both joy and tragedy. While nearly all have been in love at some point of their lives, regrettably only 37% can say that they feel the sway of the emotion in their hearts today. Age definitely dims the ardor – with only 17% of 45 years and older feeling the tug of love today. Men seem to fall out of love more easily than women – only 32% claim to be in love today as compared to 41% of the women. The words of Ambrose Pierce ( “Love: a temporary insanity, curable by marriage”) seem to ring true as only 24% of the married men and women say that they are still in love, as compared to 94% of unmarried couples. Even among the incurable romantics (who say that they believe in everlasting love) many could not help feeling disillusioned. It would seem that the celebration of Valentine’s day with sending gifts (which is the intention of 36%), dining out (planned by 34%), or an evening out at the movies (17%) for many may be less an expression of passion and romance and more a mechanical ritual.

The lack of love in people’s lives today is particularly poignant as 60% equate love with happiness. This happiness expected or derived out of love seems to come more from the feeling of companionship, affection and understanding than passion and pleasure. Love means passion for only one in ten urban Chinese. Also only for one in five, sex is one of the important meanings of love. While men talk a little more about sex, women perhaps euphemistically refer to “attraction”.

Fidelity and love

The lack of feeling of love today could well be related to a feeling that their partner has not been giving them his or her single–minded attention. Nearly half the people said that they feel they have been cheated by their partner. Whether real or imagined, fidelity seems to be a key ingredient of love in China. The feeling here is “more sinned against than sinning” – only one third admit themselves that they have succumbed to the temptation of an illicit affair, but nearly half are suspicious of their partner’s fidelity.

Written by Ashok Sethi
Based on an online survey of 290 Chinese, aged 18-54 in key cities of China. Conducted in February 2009, before Valentine’s day.

Let Old Disasters Be Forgotten

2008-12-30T16:20:00.002+08:00

It was Queen Elizabeth II who first publicly used the term “annus horribilis” (before that it was considered to be in poor taste to refer to certain parts of anatomy in public). She was, of course, referring to the miserable year that she had in 1992, where most of her children parted company with their spouses and her house (Windsor Castle) caught fire. More recently, the Economist referred to the year 2008 as the Wall Street’s annus horribilis – at the end of which, of Wall Street’s five big securities firms, only Goldman Sachs and Morgan Stanley still remain in recognizable existence.

The Chinese started the year 2008 with great expectation and anticipation. After all 2008 should have been a lucky year - an “annus mirabilis”, as all years, months and days which include the number “8” are expected to be. However, the year had merely commenced when tragedy struck in the form of the worst snow storm ever witnessed by China, with millions of workers stranded on the road, trains and railway stations and unable to make the almost mandatory trip back home for the Chinese new year. The snow had hardly melted and the workers barely resumed their roles in turning the economic wheel of China, when the earth trembled viciously in Sichuan province, and destroyed thousands of lives, and hundreds of thousands of home and livelihoods.

China did have its day in the sun when it unveiled the opening ceremony of the Olympics on the 8th day of the 8th month of 2008 and dazzled the world with its technical prowess and cultural richness. As widely expected, it brought down the curtain two weeks later with the largest haul of gold medals - even though their favourite 110 metres hurdles runner, Liu Xiang, broke the nation’s heart by limping away from the track nursing an ankle injury.

The glow of national pride was blindingly bright and many thought that it had changed China for ever. But then the “melamine” tragedy struck, a grim reminder of the hazard of greed overshadowing a sense of right and wrong. Thousands of children in China were hospitalized as they developed kidney stones as a result of drinking milk which was contaminated with melamine – an industrial chemical which found a new revenue stream as an aid to showing a high protein level reading, even when the milk has been diluted.

Already hurting at the monumental collapse of their stock market, the financial sentiment further deteriorated as all hell broke loose on Wall Street. Initially the economists and the government shrugged off the threat and felt reasonably secure and “decoupled”. However when the American consumers stopped buying the toys made in Guangdong province in South China, and workers were seen arguing for their unpaid wages, a realization dawned that this would be as much a Chinese crisis as an American one. China’s exports actually declined by 2.2% in November 2008 – first decline seen in the last 7 years.

Today, gloomy economists are speculating whether China (along with India) will be one of the worst affected economies from the credit crunch. Particularly China, which depends so heavily on exports (accounting for 37% of its GDP). How it is going to run those factories and pay the wages when the orders dry up as American consumers either do not have money or do not feel inclined to spend it. Will it be able to find alternative routes to maintain the growth? Will the traditionally thrifty Chinese (with 25% household savings rate) want to hoard even more when they see the gloom in the West? The car sales in China have already seen a negative growth in recent months. Consumers are reluctant to buy houses, an activity that added significantly to economic growth in the last decade.

That China will slow down and that the current crisis signals the end of the uninterrupted double digit growth which made China the cynosure and envy of the world is not disputed now. However, will it merely decelerate to a more modest, but still a healthy growth, while continuing on the path of striving for a better life for its citizens, or will it derail and cause ruin and mayhem. So far the government has been responsive. Interest rate has been reduced as many as five times in the last 5 months to stimulate lending and borrowing. The government has also announced that it will spend as much as 4 trillion yuan (US $ 586 billion) over the next couple of years to stimulate demand. A mammoth amount is planned to be spent on infrastructure projects, including adding 41,000 kms of railroad by 2020 and providing six million jobs on the way. However, this alone is unlikely to suffice to ensure a continued ride for the Chinese on the train to economic prosperity. To continue on the joy ride, the Chinese economy will need a nimbleness and openness with which it can reinvent itself and wean itself from the export dependence that it has been flourishing on so far.

Written by Ashok Sethi
Ashok.set@gmail.com

China's lower-tier markets get a fillip

2008-12-18T13:48:00.003+08:00

Published in South China Morning Post, November 24, 2008

Moving to lower tier markets

Concomitant with the spread of economic prosperity from large cities and coastal areas of China to inland and lower-tier cities, the market for consumer products is also expanding to wider geographical areas. While the sword of current economic crisis hangs perilously over China, there are indications to suggest that the economic measures initiated by the Chinese government to stimulate domestic demand (particularly the plan to spend 4 trillion yuan or 586 billion dollars in the next 2 years) will actually accelerate the spread of consumer products to lower tier cities and rural China. For marketing companies, this is an opportunity to move resources and investments in lower tier cities to secure a firm position in these markets of ever increasing importance.

Penetrating China

According to a survey done by AmCamb Shanghai among its members in 2007, 40% of the surveyed companies had no presence in the lower tier markets. Even successful companies like McDonald’s only operate in less than 200 of the over 600 main cities and 20,000 towns in China – not to mention the countless villages which dot the country. The fact remains that the companies operating in the big cities are only scratching the surface the four top cities only account for 3% of the population – in fact the total urban population together is only 45% of the population of China. It is not surprising, therefore, that the most successful companies in China are those who have been able to penetrate the lower tier and rural markets of China.

Though the transition from the large metros to the lower-tier and rural markets is imperative for growth, it is not always easy to implement. The lower tier cities and rural areas differ significantly from the large cities in many ways – not only in lower incomes but also in terms of the profile of the consumers, the way we can access them, the retail infrastructure, consumers’ media habits and the way they think and make brand choices. Marketers need to carefully decide their expansion strategies, and modify their marketing tactics in sync with the local consumer preferences, lifestyle and habits.

Financial crisis and China

In the meanwhile, as the world bemoans its financial woes, after some debate, a consensus has emerged among the economists about the potential impact on the Chinese economy. China, most now opine, can not escape unscathed from the global financial mess. The official figures also suggest a slow down (GDP growth of 9.9% in the first 3 quarters of this year, 2.3% lower than the same period last year) and a shadow of nervousness over job cuts and future uncertainty mars the mood of the Chinese consumers.

The biggest worry comes from the likely impact on Chinese exports. China is the factory of world, and its low priced products sit smugly on the shelves of Walmart in America, from where the consumers have been scooping them into their super sized shopping baskets with a flourish and getting past the tills with their over stretched credit cards. With American consumers losing their jobs, seeing their houses plummet in value, and their credit cards less yielding, the Chinese products seem to sit longer on the shelves, and the orders for factories in Guangdong seem to be approaching a drought.

In anticipation of further accentuation of the impact on growth, the Chinese government is naturally and logically hastening to stimulate the domestic demand. Last month the State Council announced that China will spend a generous 4 trillion yuan over the next two years to offset adverse global economic conditions by boosting domestic demand. This money will be spent on 10 major areas – which include rural infrastructure, build more affordable housing, including rural housing, transport, raising average incomes – particularly in rural areas.

While all these measures are targeted at stimulating the overall domestic demand, their effect is likely to be even stronger in lower tier markets, including rural markets. In essence, the importance of lower tier markets in China has received a big boost from the global economic crisis. This stimulus package will give a fillip to the lower tier markets in a number of ways:

- Firstly, it will provide employment opportunities related to the investment in infrastructure and other accelerated economic activities in rural China. It is estimated that investment in railway construction alone will create 6 million jobs.
- Secondly, the government plans to spend on poverty relief and try to raise the income of the lower income groups to raise their consumption ability, thereby facilitating another objective of the Chinese government – that is narrowing the ever increasing urban rural income divide.
- Thirdly, it will improve physical access to lower tier and rural markets through construction of new and improved road and railways infrastructure and hence ease the expansion of distribution networks. l
- Lastly, by providing low cost housing, it will increase the disposable income available to lower tier residents.

While the stimulus package would boost the overall economy, it would also ensure that the benefits accrue more to the lower income consumers, and those who are away from the more accessible large cities, and thereby paving the way for faster expansion of consumer goods to lower tier markets.

Written by Ashok Sethi, TNS China

Financial crisis with Chinese characteristics

2008-11-19T14:10:00.001+08:00

Observing the process of rolling jiaozi (Chinese dumplings) is an interesting experience. A long and thick strand is extracted from the pile of dough, broken into little pieces, each piece rolled into a thin pancake skin and stuffed with ground meat, chopped green vegetables, or egg. These little parcels are finally steamed, boiled or fried and served steaming hot with a dip of vinegar and optional chillies and mashed garlic. While observing the process and enjoying a portion of jiaozi and last week in a small roadside shop near Xizang Road in Shanghai, I was somehow reminded of the packaging of sub-prime loans into delicious looking structured investment vehicles, which were steamed into respectability by the credit agencies and picked up by the financial community with as much relish as I was raising the jiaozi to my mouth.

As if reading my thoughts, the restaurant owner who was rolling jiaozi, broke my reverie with a sudden question, “How is the financial crisis affecting India?” Given the universality of basic education in China, the level of general awareness (though not necessarily the degree of appreciation of the issues) tends to be high. It was not a surprise, therefore, that the dumpling roller from a village in Shandong province seem familiar with the global meltdown and curious about how it is affecting the world. His dumpling business in downtown Shanghai, however, he felt was not particularly vulnerable to the global crisis of confidence.

The mood elsewhere in China, however, is somber and in fact had been since the beginning of this year. According to a newspaper report, the number of people seeking psychological counseling in Beijing has doubled since the beginning of the year, and 85% of these are worried about possible job loss.

The stock prices started tumbling earlier this year and wiped out over half the value of most large companies listed on the Shanghai stock exchange and the savings of many who were enticed to the market by its heady ascent. Once a favorite pastime of the urban Chinese, including retired government workers and grizzled grandmothers, betting on the stock market has turned out be a regrettable indulgence.

The first Chinese victims of the current global financial crisis are the migrant workers who power the exports of cheap toys, garments, shoes and other such products to the Western world. Toy factories in Guangdong province of China are already closing and workers forced to go back to the villages they came from and again face the subsistence existence based on a tiny plot of land. Many, however, are likely to come back to the cities and seek employment in more export-proof industries of China.

Among the general Chinese population, the consumer confidence index is down from a high of 100.8 in October 2007 to 91 in September 2008 (a moderate decline when compared to the plunge in the US consumer confidence from 61.4 to 38 in just a month as reported by the Conference Board). Thrifty by nature and not afflicted by the profligate habits of their American counterparts, the confidence dip in China has not so far translated into a drastic tightening of purse strings or a cataclysmic reduction in consumption. However, the Chinese brow is also writ with worries about the future, queues outside popular and premium restaurants are getting shorter, and the shopping bags carried around luxury shopping malls seem lighter.

According to the latest data, the Chinese economy grew 9% in the third quarter of 2008, a dazzling performance compared to a 0.5% decline in Britain but a poor fizzle as compared to a blistering 11.9% growth in the same period of 2007 in China. When it did grow at this scorching pace, the talk was often of “overheating” and the government often voiced concern and attempted to rein the economic horse on steroids. But this strain has made a sudden reversal, and the People’s Bank of China cut interest rate for a second time in three weeks to reinvigorate the economy.

While not fully immune to the global virus of uncertainty and anxiety, the Chinese definitely show a higher resistance and resilience. While a relatively healthy and vibrant economy still growing at a 8%+ clip definitely helps, it is the Chinese psyche which possibly also contributes strongly to this feeling. As my colleague Eric Tai remarked “The Chinese have a saying –“Weiji jiu shi zhuanji” or “opportunity arises from crisis”. This positive thinking will definitely help the Chinese tide over the crisis with greater aplomb and the Chinese resilience should help cushion some the pain caused by unrestrained greed and excesses of the Western financial establishment.

Written by Ashok Sethi, TNS China

Imagine – a Unicef luxury watch!

2008-10-30T18:16:00.001+08:00

Defining luxury goods

While there could be many ways of defining luxury goods, possibly one key element of all the definitions will be that the functional benefit that the consumer gets out of buying luxury, though substantial, normally does not commensurate with the price paid, and the deficit is made up by emotional gratification. While emotional gratification also constitutes an important part of delivery in mass market products, the difference is that for mass market products the balance of delivery is tilted towards functional benefits, whereas for luxury products the balance gets skewed in favour of emotional payoffs.

If this premise is accepted, we need to explore whether it is possible to expand the range of emotional gratification that the consumer may get from spending a large sum of money, which does not offer commensurate functional gratification. The emotions that the luxury goods marketers have traditionally been exploiting have been prestige, class and exclusivity. Luxury advertising often portrays its users as being unique, belonging to an exclusive clique and admired and fawned upon by others.

New emotional gratifications

Human beings are complex animals and have a range of emotional needs. While needs for prestige and admiration are well established, and it is also known that consumer is willing to pay to satisfy these needs, it should be possible to go beyond these into new areas of gratification. I hypothesise that it is possible to go beyond these clichéd emotional gratifications and persuade the consumer to pay luxury prices for a range of products and services, offering newer types of emotional gratifications.

These needs include a need to feel responsible, helpful and leading a worthwhile existence. “Giving back” to the society is an often theme heard among those who have made it and feel that they owe something. I present below three new avenues for luxury goods. These avenues, I feel, will not only lead to profits for companies who explore these, but will also contribute to the good of society.

Green luxury

More and more hybrid cars are getting sold in the developed world. Sold at a significant premium, functionally they offer little more (in fact a little less, some will argue) as compared to the conventional gas guzzlers. However, the purchase is fueled by (pun intended) a need to prove (to oneself as well as others) of being a responsible consumer. More extreme is the example of cars run on fuel cells whose only emission is pure water – which in spite of the enormous cost is finding retail customers in the US and is considered by some to be the ultimate environmental status symbol. As environmental awareness increases, consumers are keen to reduce their carbon footprints and are willing to pay more for products and services which are environmentally friendly. Luxury good opportunities exist in areas of personal vehicles, energy solutions and green homes as also for a range of products and services which espouse environmentally friendly production and distribution methods.

Responsible luxury

The 2006 film Blood Diamonds created awareness about conflict diamonds and made one wonder whether the beautiful stones you are sporting are tinted in the blood of innocent people who are exploited and killed for profiteering and diamond money. RugMark is an international nonprofit organization which randomly inspects the looms of companies that agree to employ adults only and provides a child-labor free certification for rugs. With cost pressures and competition, companies have been going out of their way to cut costs. While doing that some have also fallen to the temptation of cutting corners. Luxury goods buyers will pay a premium for the emotional satisfaction that their joy of owning the product which is not produced at the cost of exploitation of others. Luxury good buyers will pay more for consumption for products certified to be made ethically and responsibly.

Charitable luxury

While charity balls is not a new concept, a charity Louis Vuitton handbag is. Unicef attempts to raise money by selling products under its brand but offers little more than New year cards, some trinkets and toys. The challenge for luxury goods manufacturers is to sell more to the buyer and make them indulge in frequent purchases. In doing that they need to find new appeals and draws. While on the face of it, the concept of luxury handbags while the poor are starving may be repellant, but the combination of the two is practical and offers a win-win situation for the buyer, the seller, and the poor. I feel that there is scope for selling luxury goods, with the sales linked to donations for the needy. In doing that, we will enrich the emotional satisfaction of the buyers and also contribute to charity (meeting the emotional needs of the rich and the functional needs of the poor!)

Written by Ashok Sethi TNS China

Why can’t they be more like us?

2008-08-08T12:55:00.000+08:00

Fearing the polluted air, the American Olympic cycling team arrived in Beijing wearing masks. The West continues to wonder why China can not fix its problems, and think and behave like them. President Bush’s address to the world on the eve of the Beijing Olympics raises some important questions…

On behalf of the United States of America, I congratulate the Chinese people and leadership for the impressive preparation they have made for hosting the 2008 Olympics. But while I say this, I must also urge the Chinese to learn more from the great nations of the world – particularly America.

We run a benign state, providing generous loans to our citizens, to buy houses which are larger than their incomes would allow, to live in a comfort that they can not afford. We allow them to live from month to month, borrowing from one credit card to repay the debt of another, to continue to flourish in an end less circle of debt fuelled luxury. The Chinese citizens are deprived of these benefits and need to pay 30% down payment for their apartment, and provide income certificates to apply for a mortgage.

I acknowledge that our poor are now facing unheard hardship, including facing the threat of losing their 4 bedroom sub-urban mansions, Most glaringly their very livelihood is threatened as they are unable to afford the gasoline to drive their 3 gas-guzzling sedans to work. The Chinese poor live in villages on their farms and struggle to feed their families and provide them with clean drinking water.

America has been tottering on the verge of recession, lost trillion of dollars in ingeniously crafted collateralized debt obligations and its legendary manufacturing enterprises are making losses in billions of dollars. China’s economy, on the other hand, staged a record growth of 11.4% in 2007 and managed to grow at 10.4% in the first half of 2008, despite the chaos that we inflicted on the world.

We take natural disasters in our stride, neglecting hurricane Katrina till the man made disaster overshadowed the natural one. Chinese, also frequently blessed with nature’s fury, fly their Prime minister to Sichuan within two hours of the being struck with an earthquake, and mobilize the entire nation to bring succor and comfort to the afflicted.

Our citizens quake to step after dusk in downtown streets of Chicago, New York and other great American cities, because of fear of getting mugged, stabbed or raped. The Chinese youth roam freely and happily in Shanghai, Beijing and Chengdu, while solemn faced Chinese policemen patrol in total oblivion of their merriment.

Our citizens have freedom – freedom to sell sub-prime mortgages, freedom to buy them, freedom to disguise them as respectable debt instruments, freedom to give them as AAA ratings, freedom to gamble (absolute luxury, when they can lose so much in the financial markets), freedom to buy guns (to escape from it all, if nothing else works), freedom to bomb Iraq (to share and divide the misery that we feeling our own country). The Chinese enjoy none of this freedom and are tightly controlled by a draconian regime with a misguided determination to protect its citizens from harming themselves.

While in most areas we want the Chinese to become more like us, there is one area where we want to retain our unique position and unassailable lead. We are the largest emitter of greenhouse gases in the world. Unfortunately this is one area in which China is becoming more and more like us. But our position as number 1 polluter is unshakable. We will not let the Chinese poor benefit from electricity, motorized transport or air travel. As we steadfastly refuse to sign the Kyoto protocol, we are determined to use all our power to prevent the Chinese from enjoying an excessive lifestyle which threatens the world with dire consequences of global warming.

I wish a great success for the Olympics and hope that they will change China for the better.

Written by Ashok Sethi
Ashok.set@gmail.com

Moral Debate in China

2008-08-07T14:56:00.000+08:00

Despite repeated aftershocks, the dust is slowly settling on the devastation of the Sichuan earthquake and the Chinese media coverage has shifted its focus to celebrating the Olympics. In all the heart-rending destruction and devastation, there are two episodes from the earthquake which generate a quizzical smile. The first of these is the story of Fan Meizhong, a school teacher who ran for his life when the quake struck, leaving his students behind. Fortunately, his school remained standing and none of his students were hurt. However, the aggravating fact was that he later, in a fit of candidness, admitted to abandoning his wards and defended his action as guided by his own sense of morality and the natural instinct of self-preservation. He proclaimed that he loved his life and that he would not sacrifice it for anyone. Only safety of his daughter (not even his mother) could induce him to sacrifice his own life. Expectedly this proclamation elicited a huge hue and cry from the general public. Nicknamed “Run Run Fan” in light of his action, faced swift condemnation and was fired from his job. Not only that, it even prompted the Ministry of education to issue a new State ethics regulation, which says that protecting the students is a moral obligation of the teachers.

While Fan’s detractors have been more numerous as well as more strident, the media has not been devoid of a few who have dared to praise him for his honesty. Fan could have kept quiet and possibly lived with a nagging feeling of guilt throughout his life. But he chose to publicly expunge it and in a way proclaim his innocence while admitting his guilt.

The second incident is perhaps even more intriguing. Jiang Xiaojuan, a 30 year old police woman in Jiangyou city in Sichuan province and a mother of a six month old child, breastfed six children who lost their mothers in the earthquake. Caught in the act by a press photographer, Jiang expectedly faced profuse showers of praise and approval. Clearly this was a unambiguous case of selfless compassion, of a member of the police force behaving with uncharacteristic tenderness and care. While most agreed to this, what caused the debate among the Chinese was her subsequent promotion to assistant commissioner of public security for the city. While her action was clearly commendable, the resultant promotion, the Chinese public felt, was not justified - as compassion alone, however heart-felt and moving it may be, is not an adequate criteria for elevation to a senior position in the police department.

The Western media and political leaders are obsessed with what they see as absence of democracy and free speech in the China. Some even go to the absurd length of saying that the country suffers from a moral vacuum. The lively and open debate around the Run Run Fan and Jiang Xiaojuan shows that it there is spirit of debate and moral discussion which is alive and vibrant in China – it is just that the issues that the West considers as the core of morality are perhaps not the same as the ones that excite debate and passion among the Chinese. West needs to resist the temptation of judging every country and every person by the single minded view of Western morality and democratic ideals. The Sichuan earthquake revealed a profile of the country which is compassionate, considerate and reflective. There is a sense of balance and intense reflection on what is right and wrong. Recognizing such a mindset, the West needs to let go, relax and let China find its own path at its own pace.

The tremors that moved the nation

2008-05-21T11:18:00.000+08:00

It was in the my office on the 28th floor of Finance Square in Shanghai, where I sat with a concept test brief in my hand, in deep contemplation on how to add value to the research design, when my cogitation was interrupted by the tinkling of the blinds against the windows. Before I could get time to puzzle about why the blinds were moving inside the building with all the windows tightly sealed, I realized that it was not just the blinds but the whole building which seem to have broken into a gentle dance. If my colleagues were frightened at the realization that we were experiencing an earthquake, they did a great job of disguising their fear and with great aplomb and composure we started shuffling down the stairs to evacuate the building (including me, with the research brief still in my hand). The tremors were persistent and I kept on feeling the building’s sway right till our dreadfully slow descent to the 20th floor. After that, while the earth seemed to have steadied itself, the legs had acquired a momentum of their own and I kept feeling the sway for quite some time to come.

Finally out of the building, we were puzzled at the strange occurrence – Shanghai has almost never had an earthquake and it was the first time that most of us experienced the trembling of the building and having to evacuate it under the fear that it will collapse on top of us. While engaged in animated discussion, some irritated and some relieved with the unexpected break in the office monotony, little did we realize the tragedy that had taken place more than a thousand kilometers away in Sichuan province. While the Finance Square kept standing and did not bury us in its steel and mortar blocks, 900 school children in Dujiangyan city near the provincial capital Chengdu, were not as fortunate. Nor were thousands of other children and adults, who could not escape their schools, factories and homes in time and were trapped under plies of rubble. Gradually the magnitude of the disaster unfolded in front of us, numbing us with grief and stupefaction.
While natural disasters are inescapable and we have little choice but to stoically and philosophically accept their tragic consequences, the subsequent human ineptitude and neglect which often compounds the misery is definitely preventable. Fortunately, China’s response was in sharp contrast to the apathy of the Generals of Myanmar when faced with the devastating cyclone which struck the country a few weeks ago. Chinese Premier Wen Jiabao was in Sichuan within hours of the earthquake. With a megaphone in hand and moist eyes, the nation saw him addressing the victims in a tremulous voice, offering condolences, reassurance and hope. It was clear in the days to come that the country mobilized every possible resource to rescue those who were still alive under the rubble and offer relief and succour to those who suffered the most.
It was a tragedy that touched the hearts of the people throughout the country. In an overwhelming wave of sympathy, the people are reaching for their wallets, donating blood, volunteering to work in the affected areas, even offering to adopt the children who lost their parents.
It will be a while before China can forget the tragedy that struck it out of the blue and traumatised the nation. Those who lost their loved ones, their homes or livelihoods will possibly live the rest of their lives with indelible physical and emotional scars. However, it will also be a while before China and the world can forget the efficiency, promptitude and compassion with which China dealt with the tragedy. It is reassuring to see that it is not only the Chinese mind which has transformed the country into an economic powerhouse, which deserves praise, but that its heart is also in the right place.

Chinese ratatouille

2008-05-12T17:27:00.001+08:00

The Chinese new year of the rat has been a turbulent one so far. Right at the start of the year, many Chinese who work in cities, away from home, could not make the mandatory journey back home, a victim of mayhem in transportation as a result of the worst snow to hit China in over 50 years. As soon as the snow thawed and a semblance of normality was restored, the age old issue of Tibet raised its troublesome head again. Not a positive press for China in the year of the rat - the year in which China will don the mantle of the Olympic host and bask in the glory of their achievements as the world gazes with awe and amazement.

The bite of the snow still gnaws, and the counter allegations and invective on Tibet still ring in the air, encouraging reflection on the state of the nation and the challenges it faces on the march to fulfill its ambition to become a moderately prosperous society (xiao kang shui ping, in Chinese). While fueling the improvement of the rural living conditions in countryside through remittances from the urban workplace, the migrant workers continue to lead a miserable existence in the cities. Subject to quetionable contracts, some times below legal wages, and little paid leave and social welfare, the workers provide the cheap labour at the country’s economic engines in its factories and construction sites. The relatively well heeled urban dwellers often look at them with fear as the “haves” often look at the “have-nots”.

In spite of the harsh existence that this group ekes out, they are still responsible for bringing money to the otherwise impoverished countryside. The Chinese government is paying special attention to this, as evident in their development plan, embodied by the slogan of a “new countryside”.

While the rural residents are learning to cope with these basic challenges and the urban folks face the ordeal of rising prices. The Consumer Price Index touched 8.7% in February this year, an 11 year high. For the first quarter as a whole the inflation stood at 8%, a 5.3% increase over the same period last year. Apart from domestic disasters such as the snow storm and the blue ear disease afflicting the porcine population, international rise in grain prices is also contributing to the rising food prices.

At the same time rising real estate prices are making housing more and more inaccessible. Buying houses, is a new way of spending new money in China – just 15 years ago there were no houses to be bought, nor was there much money to buy them. But now buying a house has become a de rigueur pre mating condition and the steadily rising price line is converting many young Chinese into fang nu (house slaves) as a result of having burdened themselves with frightening mortgages. The alternative is forced bachelorhood, if they couldn’t muster up the courage to take the loan (even if they did muster up the courage to ask the hand of the loved one in marriage!).

While the real estate was in the ascendance in the just concluded year of the pig, its flight paled into insignificance when compared to the 96.7% increase in the Shanghai composite index. For the 136 million Chinese who climbed onto the stock bandwagon, buying houses became a lot easier with this gift from the financial markets. However the many others who balked at what they saw as the irrational exuberance of the market, rued the fact that they did not have the courage to haul their hard earned savings to the nearest brokerage. However with the over 40% decline that the market has seen from the dizzy heights of the peak in 2007, they are now congratulating themselves at their foresight.

In spite of the fact that the issues confronting the Chinese are weighty, they have much to look forward to and bring back a cheer in the lives. Of course they will beam with pride when they will host the Olympics this year. In fact the pride is already on display as are the marvellous facilities, including the Bird’s Nest stadium and The Water Cube several months ahead of the schedule.

The new apartments in the cities may stretch the bank accounts of the young Chinese who rush to acquire them, but they offer distinctly improved living conditions from the old and cramped houses they inhabited earlier. The new owners are enjoying the modern acquisition and converting their homes into sanctuaries of comfort and privacy. The stores are brimming with goods to furnish the apartment and make it an exclusive abode, making its owners glow with pride.

The new middle class created as a result of entrepreneurship and well paying jobs from multinationals and Chinese companies bulging with corporate profits, are aspiring to a lifestyle of the Western elite. They visit bars, sip red wine, enjoy gourmet food, watch Hollywood films (including Ratatouille, dubbed into Chinese) and plan for holidays abroad. The chilling frost which heralded the year of the rat has done nothing to dampen the optimism and the enthusiasm of the urban Chinese who plan to continue the celebration into the year and many more to come. The year of the rat represents the start of a new cycle in the Chinese calendar – and perhaps for China too as it gets ready to stage the Olympics. Rat is believed to embody qualities of being quick witted, nimble and charming. “Rats” like to be in the thick of action, are sociable and are never late for a party – qualities which will undoubtedly be on display in Beijing during the Olympics.

The Eclectic Chinese

2008-03-20T18:07:00.000+08:00

A holiday to sweep the tombs

Chinese traditionally bury the dead. However, after the enlightened communists took reign of the country, they very rationally declared that the priority for the land is for the living and not the dead. Chinese were told to cremate the dead, burials were banned as was the erection of tombs. Given this, it seemed surprising when earlier this month, the Chinese government declared Tomb-sweeping day to be a new holiday in China. Along with the Tomb-sweeping day, holidays were also declared for two other traditional festivals of Dragon Boat festival and Mid-Autumn festival. Are the Chinese re-discovering their traditions? After years of efforts to obliterate the traditional shackles, is the Chinese government now encouraging the people to celebrate their traditions? What makes it even more surprising is the fact that these holidays will replace the three day holiday observed for the May Day celebration – an occasion of symbolic importance to socialism, whose ideals the Chinese government still claims to espouse.

The three day May Day holiday was, in fact, used to be extended into a “golden week” by adding the intervening days to the weekend (the additional holidays compensated for by working on the preceding or following weekend). Before this declaration, China observed three “golden weeks” in a year – three week long holidays for the Chinese New Year, the National Day in October and the May Day celebration. This has been the policy since 1999, when the Chinese government decided that the citizens must get an opportunity to spend their new wealth and in the process further boost the economy. Now China retains two of these golden weeks, but has substituted the third with three one-day holidays for traditional festivals.

Rediscovering the traditions

The Chinese government, as one would expect, is governed more by practical logic than tradition or sentiment. The real reason for this change perhaps lies in the fact that the three golden weeks had started to create a mayhem by the en masse movement of millions of Chinese . The populace takes the opportunity to get out of their homes, visit their families or go for vacations. This causes an immense strain on transportation (most painfully witnessed during the Chinese new year, when thousands were stranded because of snow cased disruption) and other services, and people started complaining about the exorbitant prices, traffic snarls and poor service during these weeks. Additionally, for a country so dependent on foreign trade, it is perplexing as well as vexing for its international trade partners when they see the frenetic trade coming to an abrupt halt as often as three times a year.

However, apart from the rational, there are also emotional factors guiding the change. The Chinese, with their new found wealth and prosperity, now have a reason for celebration and pride. Embracing the old traditions, and practising the associated rituals with openness and confidence is a part of that resurgence of national pride. Chinese today not only want acknowledgment for their economic success, but they also wish to be applauded for their history and traditions. Chinese have set up Confucius Institutes in 50 countries, sent their terracotta warriors for display in the British Museum - all in an attempt to demonstrate that not only is this a country of extraordinary manufacturing prowess and technology, but also has a cultural richness which deserves noticing and appreciation.

Embracing the West

Not only does China seem to be rediscovering its own traditions, it seems to be embracing the ones from the West with equal gusto and enthusiasm. Christmas celebrations begin early and cut-out figures of Santa Claus started appearing in shop windows of departmental stores from the middle of November. The silver bells, figures of reindeers, elves and snowmen jostle each other in almost a chaotic, almost desperate representation of the Christmas spirit. In a rousing finale, large pictorial displays of Christmas scenes appear in office buildings and a Christmas tree with twinkling lights, encircled with gold paper covered pots of poinsettia embellish the entrance of every office or hotel.

For a country of atheists, this celebration of a Christian festival with such enthusiasm is perhaps baffling. However, Christmas in China is not about religion, but a modern paean to consumption and fun. Masses of people throng the streets, visit bars and haunt the stores for discounted products. Chinese celebration of Christmas, is a typical example of how China embraces the West to its own advantage and adapts it to selectively pick its best from their own point of view. So no Christmas cake or plum pudding – we prefer our dumplings (according to a TNS survey, Chinese consider no food in the world to be anywhere near their own) and no midnight mass – religion has no part to play here. But shopping, gifting, drinking and merry making is embraced with zest and passion.

The marketing challenge of understanding the Chinese consumer

Neither burdened with strong traditions and rituals, nor under the blind sway of the West, Chinese are behaving in an eclectic way in deciding what to embrace and what to discard. Their decisions are based on practical logic, commerce and now also a sense of national pride. For marketers it is essential to understand how the Chinese weigh several, often contradictory, arguments and pulls to make the decision. This is as true for which festivals to celebrate as it is for which products and brands to adopt. Only keeping a hand permanently on the Chinese consumers’ complex pulse can guide the marketers in the right direction.

The China Opportunity

2008-03-19T18:58:00.000+08:00

The Unknown India

What do the Chinese think about India? Well, they don’t. 398 urban Chinese were asked to associate 24 attributes with 14 nations, including the US, Japan, Korea and India. 58% of the people associated no attribute whatsoever with India. By no stretch of imagination is India a salient nation in the mind of today’s Chinese. Among the younger generation, at best, it brings up image of excellence in software. Some envy the facility of Indians with the English language and wonder whether English is the mother tongue of many Indians. The older generation, particularly the taxi drivers, spontaneously start humming “awala hoon” on the discovery that their fare hails form India, bringing memories of a time when Raj Kapoor’s Awara was perhaps one of the five films that the Chinese government allowed its citizens to watch in a year.
A missed opportunity
The obscure status of India in the Chinese minds is a missed opportunity for India. There is much that India could achieve by raising their profile among the contemporary Chinese, as they gaze at the external world with awe and bewilderment and whose view of the world is yet to fully crystallize. It is the appropriate time to invest in creating a clear image and a distinctive identity for India, and by doing so, benefit from the momentum of the fastest growing economy in the world. While there are many areas of opportunity, the following do stare prominently as the ones that India is particularly well suited to exploit.
Tourism
34.5 million Chinese visited a place outside China in 2006 – not even a small fraction of these visited India. To the Chinese today, the most attractive tourist destinations are the European countries such as France, Italy and the UK as also Australia.
How can India start to attract the Chinese tourists? There is a seed of a perception which could be exploited - according to a survey of Chinese attitudes towards different countries, while as a country with rich culture and traditions, the Chinese are proud of their own place – India and UK are at the second place. This perception of culture and tradition could be built upon to attract the Chinese tourists. While the Chinese material needs are being satisfied, little sustenance is available for their spiritual needs. Yoga is already a bond (albeit still a weak one today) which attracts the Chinese to India, as thousands of Chinese have taken to yoga it all its forms and exotic variants. These elements of Indian tradition and culture could be effectively marketed to attract a fair share of the Chinese tourists.
Software
In the field of computer hardware and software, US is the clear leader in the Chinese minds – but India is rated next – though a distant next. However, a foundation already exists for India to exploit this image with a mild recognition that the Chinese give to Indian software expertise. Perhaps this is one area that the Indian software companies are already acknowledging and have taken steps to exploit. Infosys, TCS and Satyam have set up development centres in China and are gearing up to carve a share in the huge domestic Chinese software market. Chinese service industry is still in a primitive state in China and to grow and enhance its quality, software is perhaps one of the more important tools that it needs. Indian companies are in a good position to carve out a niche for themselves in this market – provided they build further on the existing image, make their presence felt in China and invest in learning about the needs of the Chinese industry.
Managerial expertise
While the economic growth of China is clearly because of policies of the Chinese government, the Indian acceleration is perhaps in spite of the Indian government. The Indian growth is clearly attributable to the private sector and their ability to efficiently exploit both the domestic opportunities and the export potential of Indian services. On the other hand, the big corporations of China are still largely state owned behemoths. The growth in the size and profitability of Chinese companies and the huge Chinese banks, is not because of their skills and innovation, but because of their monolithic position coupled with increasing money in the hands of the Chinese consumers. Few Chinese have heard of the Tata’s and their purchase of global companies and brands or the Ambani’s who seem to be expanding their skills to touch every area of Indian life. A knowledge in China of the proficiency of Indian private enterprise and the skills and expertise of the Indian manager, will create a huge opportunity for Indian talent and businesses.
Entertainment
Karishma (translated into Chinese as Qi Ji or miracle) has been on the air on several Chinese television channels. A few other Indian serials have also hit the Chinese television. The most popular Asian cultural imports in China are, however, Korean. Korean films, television drama and music are a rage in China (as they are in many other Asian countries). Korean films and drama, offer plots of family intrigue and romance, that are quintessentially Indian, indicative of the fact that Indian storylines and plots are likely to appeal to the Chinese audience. In fact Indian entertainment industry, given their experience and expertise could even develop special programmes for the Chinese audience. India is in a better position to do this than any other country - both in terms of the technical prowess and creativity, as well as their ability to understand what will move their Asian neighbours.
Education
While India has always prided itself on its education institutions, the irony is that Indian students are coming to China for higher education in medicine and there is practically no reverse flow. Indian Institute of Science at Hyderabad gets more MBA applications from Asia than any other management school other than Harvard. Indian Institutes of Management and Indian Institutes of Technology are often rated as among the best in their class globally – a fact that India could gain tremendously by advertising to the Chinese. Chinese are travelling all over the world in quest of higher education, often enrolling themselves at poor quality institutions in obscure locations. While it is true that India is hardly able to meet the demand of its own citizens for high quality higher education, attracting international students is sorely required to raise the profile of Indian education. India needs to actively market its education institutions in China. While success may be limited in the short run, the long term potential is extremely attractive.
Need to create the Indian image and identity
Chinese do not have a high opinion of Indian products. For quality products they look up to Germany, the US and Scandinavian countries. When it comes to perfumes and luxury products, they think of France and for consumer electronics Japan and Korea dominate their thinking. However, India has a foundation of an opinion which could serve as a basis for creating a unique image and identity for India and what it can offer to China. India stands to gain immensely from embarking upon this effort – or in omitting to do so faces an enormous opportunity cost of further growth and international prominence.

A Porcine Issue

2008-03-11T17:24:00.000+08:00

China Daily, the leading English language daily newspaper in China, reported some time ago that a hog weighing more than 1,040 kg was crowned the “king of pigs” in Ningxiang County, Hunan province over the weekend. To the best of my recollection, PG Wodehouse, while describing the adventures of the Empress of Blandings, never really mentioned her precise weight, but it would perhaps be a fair assumption that Lord Emsworth would have been proud of this achievement, if his own sow had reached such heights (or weights, to be more precise).
The story on the fattest pig is not the only porcine story in the Chinese papers. In fact, pig and pork have been extremely salient in china for some time. China’s consumer price index (CPI) jumped 4.7% in 2007, with the price of food showing particularly ballistic tendencies. Specifically pork prices almost doubled last year due to short supply and mounting feedstuff costs. Apart from rising prices for grain used as feed, blue ear disease - also known as porcine reproductive and respiratory syndrome - killed a large number of pigs nationwide last year. As a result, the Chinese farmers, despite their love for pigs and their meat, were less enthusiastic in rearing them than in the past. The central and local governments plan to launch a concerted effort to rekindle their enthusiasm for raising pigs and boosting pork supplies. China is on a comfortable and steady growth path and maintaining stability – whether it is in currency valuation, consumer incomes, political climate or pork prices – is of the essence.
The year of the golden pig

Ironically the scarcity of pigs came in the year of the pig (there was no shortage of chicken in the year of the rooster in 2005, and no shortage of dragons is expected in the year of the dragon in 2012) – though rat population hopefully would be contained in the year of the rat which started this February. In Chinese tradition, each year is cyclically assigned one of the 12 animals, each of whom are believed to bestow some specific benedictions and character idiosyncrasies on the humans born in that specific twelve month period. The year of the pig is one of the more cherished ones and thought to bring luck, prosperity and ampleness (like itself). A person born this year is likely to be intelligent, honest, courageous, gallant, and sincere. They are good implementers can be relied on to see things through. They also tend to be popular and make lasting friendship and are good neighbors.

The years also rotate through five elements of metal, wood, water, fire and earth – and when pig and metal (gold really) coincide (as it was believed to have happened this year) the floodgates of fortune are expected to open like never seen before (or only seen 60 years ago, as that is when it would have occurred before).

It was under this expectation, that the youth of China timed their sexual activity to ensure the arrival of their off-springs in this auspicious period. It is reported that this year saw the birth of a lot more babies than the previous years. Of course, none thought about the pressure it will bring to the lives of the Chinese obstetricians, who were getting used to an easy life, thanks to China’s one child policy. Similarly, the supply of maternal beds and other wherewithals related to child birth are also reported to be strained. On the happier side, figures indicate that the companies manufacturing diapers, baby foods and other goods of “little” interest upped their advertising and reaped generous rewards.

The marketing opportunity

Marketing companies often struggle with the extent to which they need to balance their global strategies with the subtleties of local culture and traditions. The fervent communist era in China and the cultural revolution did its best to liberate the Chinese from the shackles of their traditions and beliefs. However, the interest in Chinese Zodiac, the strong beliefs about lucky and unlucky numbers (most Chinese buildings do not number the 4th floor, as number 4, because of the similarity of its Chinese pronunciation with death, is believed to bring misfortune) and the increasing enthusiasm with which Chinese traditional festivals are celebrated, seems to suggest that companies will be well advised to take cognizance of the traditions, and develop their marketing campaigns to take advantage of the consumer interest in these. The more marketing savvy companies in China are already launching special communication and marketing campaigns around traditional festivals. The festival related marketing activities are likely to receive a further boost from the recent government decision to declare three additional holidays for the Chinese festivals of Tomb-sweeping day, Dragon Boat festival and Mid-autumn festival.

The fattest pig in China

While marketing companies deliberate on appropriate strategies to win the hearts of the Chinese consumers, it is reported that the owner Xiao Shahong of the Chinese “king of pigs” apparently declined an offer to part with her precious animal, at a record of more than 50,000 yuan ($6,730). It is befitting that the prized pig is preserved, loved and cherished while the Chinese just finished celebrating the last few months of the year symbolized by it.

New slogans for the new times

2008-02-28T21:51:00.001+08:00

The 17th National Congress of the Communist Party of China took place in Beijing late last year, with over 2000 delegates attending from all over the country. In his two and a half hour address to the delegates, President Hu Jintao described several important achievements as well as several significant challenges facing China today. The speech clearly exhibits the pride that China feels in its achievements as well the candid concern for the current issues and problems. However, it was interesting to see that while China has made immense strides in many spheres, the tradition of the rhetoric and the use of slogans is firmly in place. Of course, the old slogans have been replaced by the new. The current rage propounded by President Hu Jintao is “harmonious society”. Some time ago when the government abolished the agricultural tax, the move was accompanied by a slogan of “new countryside”. Also talked about for quite some time is China’s ambition to achieve a “moderately prosperous society” (xiao kang). President Hu added a few more in this congress – scientific outlook on development (implying balanced and sustainable development) and socialism with Chinese characteristics (implying that China is different and outsiders should stop telling it what it should do!).

Slogans or biayo yu as they are called in Chinese, have been integral to life in China since the communists took over in 1949. In fact during the earlier days of communism, the country was practically wired up through public address systems which incessant broadcast of slogans, exhortations, party doctrine and even threats. Prominent slogans from that time are – down with imperialist running dogs, suppress counter revolutionaries, serve the people. From time to time new slogans made their way and the one which really changed the country and paved the way for rapid economic strides was the one proclaimed by Deng Xiao Ping when he said “to get rich is glorious” (or words to that effect).

With the opening up of China to the rest of the world in 1978, the scale and shrillness of slogans substantially decreased. Over a period of time political slogans have been replaced by commercial advertising and messages of indoctrination gave way to messages of inducement of unspeakable joys of consumption or unthinkable relief on usage of various products. Coming from the tradition of sloganeering, it was not surprising that the initial advertising often resembled the tone and form of traditional slogans. Even now a large proportion of advertising seen on the Chinese television comprises models holding the brand to the camera and ecstatically recounting its virtues.

It was thought that the Chinese consumer is a simple soul and can not understand the subtlety of soft advertising which attempts to endear the brand through use of emotions or clever creative devices. Direct communication of the benefits in unambiguous terms was considered the safe route of communication. As a result while advertising in many other markets is as much entertainment as brand communication and attempts to engage the consumer through subtle creative devices, in China it is often a direct onslaught with the core benefit – often repeated several times within the same advertisement.

However, research done in China shows that this direct route does not have to be the one that an advertiser needs to embrace to succeed. Emotional advertising works and so does humour, endorsement or any of the other genres of advertising practiced elsewhere. The success of advertising in China, as elsewhere, depends on the ability of the advertisement to address the key consumer concerns, to overcome the deterrents for use and offer persuasive motivations for adoption of the brand. It also depends upon the extent to which the advertising portrays a social imagery that the target group can identify with and its ability to reflect consumer culture and aspirations.

It is interesting that it is not only the commercial world which is changing its attitude and strategy of communication. The Chinese government’s adoption of the one-child policy in late 1970’s was accompanied by strident and heavy handed communication. The slogans at that time included – “one less child is one less tomb”, “have less children and more piggies” or even "houses toppled, cows confiscated, if abortion demand rejected". In an effort to reflect the modern times, the National Population and Family Planning Commission in early August decided to begin replacing offensive slogans with new, more gentle communication. The new messages revolve around positive motivations of "healthy childbearing," "reproductive health," "rearing better children," and "care for girls," and focus on expressions like "life," "health," and "happiness". The new kinder messages like "Mother Earth is too tired to sustain more children" and "Both boys and girls are in parents' hearts" reflect the changing mood of the nation and a population which is demanding and getting more and more respect, consideration and a distinct voice.

Guanxi on the Net

2008-02-20T22:56:00.000+08:00

From China to Spain

Tuangou.es is a team buying website in Spain. Consumers who want to buy a particular product, register on the website, the group of consumer interested in the same product then flexes its muscle and wrings the retailer’s arm to secure unimaginable bargains. Tuangou.es is managed by Sonia who lives in Alicante in Southern Spain. However you will not find the word “tuangou” in the Spanish dictionary – nor in fact in the Catalan or any of its variations heard in Spain. You will, however, be able to locate “tuan” and “gou” separately in a Chinese dictionary, meaning “group” and “buy” respectively, which have come together to mean group buying, which combines the power and reach of internet with the bargaining power of a group.
Tuan gou (team buying in Chinese), emerged from China in online chat-rooms, and graduated to more organized websites, such as 51tuangou.com and www.teambuy.com.cn. Tuangou marries innate Chinese propensities for social-networking and haggling in a contemporary bundle to the advantage of the consumer. This has now spread to Spain, indicative of the fact that not only are the Chinese consumers exploiting the power of the Internet to the hilt, they are also setting trends and examples for the rest of the world to follow.
The power of Internet in China

Xu Jinglei, a popular Chinese actress and film director, has the world’s most visited blog (sina.com.cn/m/xujinglei) with 86.97 million clicks in 18 months. Blogging is popular in China as it allows an easy avenue for expression, which has traditionally been hard to find in China. Blogging has caught the imagination of the Chinese who use it to express their views, share their feelings and express their personality. Not surprisingly, the Chinese government felt compelled to make some efforts to contain this phenomenon. In an attempt to tighten its grip on bloggers, it demanded that they register in their own names – a move that the authorities quickly reversed on facing the crying protestations from the blogging sites and the bloggers.

Currently a little over 10% of the Chinese population has access to the internet. However this translates into over 130 million internet users, making China the home to the second largest group of internet users in the world. The penetration in the big cities, rivals that of the Western world and internet has gradually become an integral and all-pervasive part of the lives of the urban Chinese. Today the Chinese buy on the net, sell on the net, watch movies and television on the net, seek employment on the net and look for romance and marriage on the net. The recent stock market boom is greatly fuelled by millions of Chinese betting their savings through their accounts on the net.

Need for information

The explosion of the net and the overwhelming acceptance from the Chinese populace needs to be seen in the context of the enormous amount and the incredible pace of change which has taken place in the Chinese society. Change implies an increase of opportunities, a multiplication of choices and the concomitant need for information and advice to exercise these choices. Unlike the countries which developed gradually over a longer period of time, the traditional Chinese information systems could not keep pace with the change. The traditional information network and media was anyway designed to pass the party doctrines to the citizens, and inculcate values of moderation and conformity, not to inform them about how they can improve their consumption of product and services. In other societies, consumption and choice is guided by experience of others, word of mouth, and experience passed down in families and friends. Today multitudes of Chinese are going abroad on holidays, buying automobiles, buying apartments, and have no one to turn to for information and advice in their immediate family of close circle of friends who have done these before. It is not surprising then that the internet fills this vacuum and takes the role of the source of information and the guide.

Implications

To the marketers, the phenomenon of internet offers both an opportunity and a challenge. Clearly no manufacturer can afford to be missing from the net – and that holds true whether the company is a manufacturer of a consumer electronics, household cleaners or a provider of financial services. The presence on the net is required to inform about the products, to advertise their advantages and to encourage user feedback. With the advent of Web 2.0, the flow of information between the manufacturer and the consumer has truly become a two-way phenomenon, and manufacturers need to tap into the enormous bag of consumer creativity and power for innovation. Companies are already using the net to encourage user contribution to the development of the brand, its communication and the product portfolio. The net offers the opportunity to use the consumers, not merely to test products and brands, but to participate in their creation.

Guanxi for sale

It is amazing how China adopts the new while retaining old habits and practices. Guanxi is a much touted concept, and refers to the Chinese predilection for depending upon relationships and connections to move files and get things done. Gaunxi is now for sale on the internet through websites that puts you in touch with the person who could get your child into the best kindergarten in the locality, help in getting an approval secured or a payment expedited or any other similar tasks, both dubious and legitimate, where your normal, unaided efforts may be expected to face difficulties. The opportunities offered by the net are only limited by your imagination – and possibly, your scruples.

China's View of the World

2008-02-20T22:47:00.001+08:00

In 1773, King George III dispatched Lord McCartney as his ambassador to China to present himself at the court of the Qing Emperor, Qianlong. Emperor Qianlong, widely considered as an enlightened ruler, dismissed the ambassador by saying, “As your ambassador has seen for himself, we possess all things. I set no value in objects strange and ingenious and have no use for your manufactures”. It is not without reason that the Chinese name of the country means the “middle country”. Chinese have traditionally considered their place right at the centre of the universe and historians and commentators often ascribe to the Chinese attributes of an enormous self-pride, bordering on xenophobia. However, if there is one attribute which a modern historian will ascribe to China, it is “change”. China has changed beyond recognition since Deng Xiao Ping opened its doors to the external world, while at the same time proclaiming that “to be rich is glorious”. The change is not only evident in gleaming new highways and sky caressing towers, but also in the people’s minds. TNS set about to investigate the contemporary urban Chinese view of the world, and also their own place in it.

World leadership

On the criteria of economic development and world leadership the US towers above all countries in the Chinese minds. Chinese clearly acknowledge America as an economic powerhouse, a world leader and an influential country – far ahead of any other country, including their own. As an economic power they place China at the third place, just a little behind Japan. However as a “world leader” and an “influential country” the Chinese place their own country at the No. 2 slot, after the US, but far ahead of any other country. It is evident that the Chinese are proud of what they have achieved (justifiably so, if you look at the 8%+ growth rate for 20 years in succession) and clearly place China far ahead of any other as a country “with a fast growing economy”.
The Chinese do not have a high association of any country other than their own as “peaceful”. The Scandinavian countries come next – though at a significant distance from China. Only 9% consider the US as “peaceful” – the same as the UK. Japan, a country against which China still harbors historical grudges, is rated even poorer.

German machinery and American computers

On the commercial front, the Chinese have the highest opinion of Germany - with a 38%association with “a country which makes excellent quality products” . US has the second highest association (33%). Japan and Scandinavian countries also do well, followed by Korea, China itself and UK.
US industry is seen to excel in many areas – ranging from quality of high tech products (No. 1 position), health care products (No. 1), and quality of drinks (No. 1 again). Germany is seen to make the best automobiles and machinery. Despite all the trouble facing the American automobile industry, Chinese still hold the American automobiles in high regard – next only to the ones made by the Germans.
But when it comes to perfumes and luxury products, no country can match the allure of France – a perception which extends to personal products in general and in fact also garments (though Chinese feel they themselves make pretty good garments).
In the field of computer hardware and software, US is the clear leader – with no other country anywhere near it (India a distant second in software). In general, American products have a perception of being technologically advanced, innovative and modern. Germans and the Japanese do better on products with good craftsmanship, good detailing and products with a long life. Quite understandably, the Chinese consider themselves as the country offering products with the best value for money (followed by Japan, and the US not doing too badly at No. 3 slot).

Fashion leader and trend setter

America is seen to combine the best of science and art, and is not only seen as a centre of technological excellence but also as fashion leader and a trend setter. US is far ahead of anyone else in producing good popular music and good movies and drama. Chinese express their appreciation of this by lapping up the pirated DVDs and downloading from free file share sites – though not as the US would like them to express - by paying the full price that the Americans normally pay.
Not only science, technology and art, the Chinese recognize American excellence in education and sports. American Universities are considered as the best, with UK not far behind.

While in pop art, the US reigns supreme, when it comes to serious art and culture, it is France which takes the place of pride, and specifically on the quality of museums, UK takes the top spot. As a country with rich culture and traditions, the Chinese are proud of their own place – India and UK are a distant second.
The Chinese feel that the US is the best country in the world to go and work in (China included). However, much to the relief of the anti-immigration American lobby, most Chinese still prefer to settle and finally retire in their own country. They would, however, like to visit America as tourists – though in this US competes strongly with several other destinations such as France, Australia , Scandinavia and Italy.

Cuisine and people

In spite of the fact that the Chinese consume large quantities of Kentucky Fried Chicken and McDonald’s burgers (or perhaps because of it!), the Chinese do not hold the American cuisine in a high esteem. On this aspect, Chinese show extreme patriotism, though some have positive associations with French food.
Finally, there is one area that the Chinese men need to seriously work on. Only 12% of Chinese women consider men from their own country as handsome (Japanese men rate the worst here). Many more Chinese women seem to be drawn towards the French, the British and the Italians (all above 20% association). However, the Chinese men are most drawn to their own women (40%), though some acknowledge the charms of the French ladies (23%). With a serious gender imbalance coupled with the poor evaluation from their women, Chinese men may find attracting suitable spouses an uphill task.
Based on an online research among 398 Chinese, aged 18-44 and living in key tier 1 and tier 2 cities of China. The research was conducted by TNS, the largest marketing information provider in China, and the second largest research agency in the world.
Written by Ashok Sethi. Ashok is the regional director methodology and analytics for TNS and is based in Shanghai.