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.
Wednesday, February 18, 2009
Tuesday, December 30, 2008
Let Old Disasters Be Forgotten
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
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
Thursday, December 18, 2008
China's lower-tier markets get a fillip
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
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
Wednesday, November 19, 2008
Financial crisis with Chinese characteristics
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
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
Thursday, October 30, 2008
Imagine – a Unicef luxury watch!
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
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
Friday, August 8, 2008
Why can’t they be more like us?
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
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
Thursday, August 7, 2008
Moral Debate in China
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.
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.
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