Half price for those with no "better half"

Singles' Day

One would have thought that Singles' Day would be a celebration of being single, when those who consider themselves lucky having escaped the clutches of matrimony, will revel with gusto and exchange congratulatory messages.  However in China, one of the few countries which has taken to the festival with enthusiasm, we see dating parties, mass marriage ceremonies and other activities designed to help the singles in losing their independence. Singles' Day seems to be treated as an occasion to attempt to rid oneself of one's single-hood and start dreaming of romantic togetherness, rather than a celebration of "single-hood". 

Online shopping extravaganza

While the significance that this day (which is celebrated every year on the 11th day of the 11th month) is debatable, the marketers have latched on to this and adopted it as a day when they will get rid of their inventories and persuade consumers to liberally open their purse strings.  During some other holidays also, most notably golden week holidays (or huangjinzhou ), we witness festooned shopping malls beckoning customers with enticing deals. Customers normally do not disappoint the marketers and reach liberally for their wallets during this period of biannual break (down to two a year from the earlier three, as May Day holiday is reduced to a single day celebration). Other festivals like Mother's Day or Father's Day also try to offer excuses for retail therapy. Singles' Day is a relative new addition to these hyper shopping festivals. The logic of why one should shop on Singles' Day is not clear (one can more easily understand why one would shop on Valentine's Day). Perhaps it is to console oneself, literally using shopping as a therapy for loneliness. Or to buy the latest fashion paraphernalia to prepare oneself for the mating ritual and try to win the attention of the opposite sex while dressed like a peacock. One needs these accessories as the game is becoming increasingly competitive, the gender imbalance in China means that there would be 24 million Chinese men who will be unable to secure a bride in the next 10 years. For these souls Singles' Day may become a life-long celebration (or lament), and "half price" at the retail shops a substitute of having a "better half".

With the unstoppable growth in popularity of online shopping, the e-commerce vendors are trying to create their own occasions for shopping. They seem to have successfully hijacked Singles' day shopping bonanza and clearly established it as a special occasion not just for any shopping buy specially for online shopping. This year it is estimated that 213 million of the 550 million internet users, took the opportunity to click a purchase on Singles' Day. Alibaba, the owner of the largest online platforms in China (Taobao and Tmall) claims to have offloaded merchandise worth a hefty 19.1 billion yuan on a single Singles' day. The secret of the success is attributed to generous discounting, with some products available for picking at half the regular price. 

Marketing opportunity

Is this shopping orgy, on a particular day of the year, with no natural connection to buying, a marketing success? Does it lead to sustained increased consumption, or merely an advancement of the purchase date, as is true with many other promotions? Does it really add value to the brands or the retailers in the long run? As with all promotions, marketers need to seek answers to these questions by carefully studying consumer behavior and attitudes. At the same time they need to worry about the potentially negative effect of heavy price-offs on brand image. In fact they need to explore how they can convert this occasion from a mere opportunity to offload their unsold goods, to an occasion to knit a bond with the consumers. According to the TIME magazine's "10 Ideas that are changing  your life", living alone is the new norm - 28% of all U.S. households are made up of people who live alone. With declining birth rate, delayed marriages and high divorce rate, the number of single member households in China is also on the increase. Marketers need to adopt a long-term strategy and look at the Singles' Day as an opportunity and occasion to win the affection and hearts of these singles in a more durable manner (after all they are still unattached and very likely to be open to a bit of love and wooing!) rather than merely a tactical opportunity to lighten their unsold inventory.

Written by Ashok Sethi

Regional Development Director – GfK Consumer Experiences, Asia Pacific

Importance of being "Foreign" -Global, local or glocal?

Multi-national companies in China often wonder the extent to which they should emphasize their foreign origin to the consumers as against demonstrating roots and strength in the local market.  In general it is true that in China, as in many other developing countries, products of international origin command a certain degree of respect and are often favored over their domestic rivals. The reasons for this are not difficult to fathom - including frequent disastrous experiences that consumers have had with some miscreant local players. However, given the ascending star of China on the global stage and the emergence of a strong streak of national pride, one could also be forgiven to assume that emphasizing local roots is of paramount importance.

Like many marketing riddles in developing markets, this is a complex question and the answer depends upon many factors. First of these factors is whether the product category in question is a premium product or an inexpensive product of daily use. At one end of the spectrum are luxury product categories.  In these categories, only international brands have been able to register their prowess with the consumers so far. Consumers use such products for their exclusivity, as status symbols and as markers of success in their climb up the ladder of success. Brands are valued for their high quality, craftsmanship and heritage. Brands are often strongly associated with a country and derive their image from the perception of the country (as in case of Luxury automobiles from Germany, a country known for its craftsmanship and engineering skills, or perfumes from France, associated with romance and chic)  Clearly establishing your international origin is of critical importance in this category. Such brands normally do not need to (in fact are not advised to) adopt their core offer and brand essence  to the local markets.

At the other end of the spectrum are daily use products whose usage is in the private space. Whether you use an expensive premium product or a cheap one, may have a significant effect on how well does your bathroom floor shine, but not in terms of how are you seen by your friends and compatriots. The consumer choice of such products is based on price and basic functionality, and consumers show little concern about the origin or provenance of the brand. In fact, often the consumers are not able to correctly classify such fast moving consumer goods as local or foreign. In a research among consumers in second tier cities of China, many consumers mentioned Johnson & Johnson as coming from Shanghai!

For products which fall somewhere in between the continuum of luxury and pedestrian, the issue is a bit more involved and establishing the international origin can be a plus though not necessarily so. While being foreign may be associated with better quality, being nimble and having a strong pulse of the market and the consumers can be even more important. Marketers have to carefully decide the relative emphasis they need to place on their international origin and local roots. One important guiding factor is the specific product category. For high technology products, consumer experience suggests that international brands bring in a quality and panache that local brands struggle to achieve. On the other hand for some categories such as skin-care or apparel, understanding of local tastes and preferences can act as a plus. In this middle territory, local brands often try to disguise themselves as international ones by choosing names such as Metersbonwe ( a popular apparel brand in China) with varying degrees of success. 

The third factor guiding the brand's strategy is specific to the brand. For brands like Coca Cola and Nike, which through clever and consistent marketing investments, have built a unique narrative and aura for themselves, which has stood the test of time as well the test of geographical diversity, it makes sense to exploit their universal value in all markets. For other brands, which though still international, lack that strong narrative, localisation and ammasing local strength may be a more logical choice. Even when such brands choose to retain their global aura and persona, localization of communication themes and styles is necessary - absence of which often leads to alienation.    

Lastly, while such preferences and attitudes do determine the importance of being "foreign", certain events can suddenly change the equation. The most notable of which has been the milk contamination scandal, which drove mothers to imported milk powder to ensure the safety of their children. In a short period of time, the share of imported milk powders rose to unimaginable levels. International marketers need to be on the look out for such sudden "change of wind", which can make their provenance and heritage more valued by the consumers.

Written by Ashok Sethi

ashok.set@gmail.com

The case of the fraudulent frauleins

Financial fraud is becoming more salient in China. Interestingly, of late, we have witnessed a number of "fraudster frauleins" – a few women entrepreneurs who scooted (or tried unsuccessfully to scoot) after relieving a number of gullible lenders of rather large sums of money. Ms. Zhang Hong, boss of a medical devices company in Nanjing in Jiangsu province, went missing with her son a few weeks ago. Along with her went a sum of RMB 500 million which she owes to several hundred private lenders. In another case of the "most beautiful boss", Ms. Gu Chunfang was apprehended in Shanghai, having earlier tried to make herself scarce with an equally large sum of money. While the temptation for these skilful and attractive operators is strong, the punishment in China is disproportionately severe. Ms. Wu Ying, another comely entrepreneur from neighbouring Zhejiang Province, is facing a death sentence for crimes involving similar fund raising.

In China it is not easy for small and medium enterprises to borrow from banks to finance their operations. Most banks are state-owned and they tend to favour lending to state-owned enterprises. On the other hand, China's large body of savers are finding it difficult to find attractive returns, as interest rates are low, the stock market has been sluggish, and the property market is on a strong leash. The lure of double-digit returns through private lending, therefore, is not insignificant. Hence there is a healthy demand as well as supply for private lending.

The effect of pulchritude on human emotions and behaviour is a complex subject. Daniel Hamermesh, an economist at the University of Texas, has been frequently writing about “pulchronomics” or the linkage of looks and economics. In a recent book called “Beauty Pays” he professes that, over a lifetime, a good looking worker in America might on average make $230,000 (in terms of today’s wages) more than a relatively plain one.   Beauty generates the confidence of competence and trust. Research has shown looks of the candidates play a significant role in voters’ choice. And  given the number of cases of fraudulent frauleins in China, one can possibly at least raise the hypothesis that Chinese men of substance find themselves reaching more readily for their wallets when confronted with a woman of grace.

In the meanwhile the Supreme People’s Court of China has overturned the death sentence for Wu Ying and ordered a retrial. It is not known whether the defendant’s good looks and youth were a part of the factors which led the judges to overrule the severe punishment.  But research does show that good looking offenders do get away with lighter punishments.

Linsanity

China found another hero in Jeremy Lin, whose success gave birth to a new word "Linsanity". The lightning and stratospheric ascent of Jeremy Lin in popularity among the Chinese seems to suggest that they are rather desperately in search of heroes and ready to overlook minor details of origin and political belief (Jeremy Lin is a Christian with his origins in Taiwan) in their embrace of such icons.

The psychology of this quest for heroes possibly lies in the Chinese desire for celebration of their achievements as well as international recognition of their success. While China is continuously adding to its list of achievements domestically, international recognition is often not forthcoming or comes begrudgingly. Even if recognition is accorded, it comes with a spectre of Chinese dominance. While Western nations refuse to applaud China's achievements, Western brands need to make sure that they do so – or else they will lose the opportunity for emotional connection with the Chinese.

While national or clannish identification definitely leads to hero worship, the developing countries like China and India reward  another characteristic in selection of their heroes – which is the quality of being underdog, who wins accolades against all odds, fighting and valiantly overcoming the hurdles and barriers which came in his way. On the face of it Harvard educated Jeremy Lin is hardly an underdog – a privileged Asian kid form an Ivy league university. However these are the precise characteristics, which make him an underdog in the world of NBA – which rewards not Ivy league education but towering body height and impressive physique – something which one would not associate easily with Jermey Lin and which perhaps does enhance the value of his accomplishments as seen by his large fan base in China.

By

Ashok Sethi

Ashok.set@gmail.com

Chinese consumers in 2011

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

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?

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