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China in Spotlight




                                THE AGE OF THE CHINESE CONSUMER
In this interview, Chinese business executive Han Wei answers questions about the Chinese consumer, developing consumer markets in China and what foreign companies need to do to be successful in China.

Han Wei
Executive Vice-President and Secretary-General
Han Wei is Executive Vice-President and Secretary-General of the World Eminence Chinese Business Association. The association is a global organization that promotes cooperation between the top 500 Chinese entrepreneurs and enterprises. Ms. Wei holds a doctorate degree from American City University.

 Q: Are Chinese consumers still wary of new brands?

A: “According to a Chinese retail market research report by Deloitte & Touche, one of the world’s leading accounting firms, Chinese consumers like to try new brands, especially consumers in second-tier cities. According to direct consumer experience, many Chinese people favor foreign brands. Some Chinese enterprises use foreign brand names, such as ‘Younger.’ ”

Q: The Chinese tend to trust local brands. What is a strategy for marketers to overcome this?

 A: ““Cooperate with Chinese enterprises and use Chinese brands.”    

Q: Is the generation in their late teens and early twenties the ideal target for new brands?

A: “For people in their early 20s, compared with their predecessors, there is greater emphasis on personal feelings and faster acceptance new brands.”

Q: Chinese like to impress with a quality brand but research indicates that they are willing to pay only a 2.5 percent premium for branded products. How can marketing people deal with this dichotomy?

A: ““I see this in two ways. On one hand, China overall is still a developing country and most people’s consumption is limited; therefore, there is not much high-end purchasing power. On the other hand, there are many rich people in China and their purchasing power is amazing. It is most important to target the rich people, and target your marketing.”

Q: Many international and Chinese brands have not succeeded because they did not recognize the many different types of Chinese consumer; they locked into the stereotypes. Do you agree?

A: “Yes. You need to know China well. If you want to make foreign brands successful, localize appropriately rather than sticking to stereotypes. For example, McDonald’s launched a “spicy chicken” and other foods in many markets, rather than staying with their standardized menu.”

Q: Research indicates China is not as homogeneous as one might believe; there are thought to be seven regional markets. Do you agree? Is a separate strategy needed for each market?

A: “In China, different regions require different marketing strategies. The regions are usually divided into seven or at least several, and there is no standard classification. This needs to be based on the product itself.”

Virtual Ribbon Cutting Ceremony with the co-hosts and co-organizers

Q: Are there different attitudes between the regions when it comes to consumer behavior?

A: “Consumer habits are different in different regions. For distance, buying vegetables in the north is in “pounds”, however, in Shanghai, quantities may be much smaller. Another one is that different regions have different habits about whether to use a shopping bag.”

Q: Chinese consumers have a lastminute decision making style. How can marketing plans cash in on this?

A: “Chinese consumers think that products on the same shelf would all be the same. But the top-rated product would be by itself, more expensive and more diffi cult to purchase. Marketing, promotional and other activities, need to be systematic, not just a one-time occurrence.”

Q: Coastal Chinese consumers are better off than inland consumers. Do companies have to acknowledge this in their marketing plans?

A: “China has a vast area and a large population due to historical and political reasons. There are economic disparities between urban and rural areas and between east and west. When doing the marketing plan, the company cannot ignore this factor, in pricing, channel development, brand communication and product differentiation. For example, with China’s “Move home appliances to the country” campaign, the government and companies embarked on a strategic action for the rural market.”

Q: Research by Gallup indicates that brand preference was in decline in the last decade dropping from 78 percent to 67 percent in 2004, for example. Is this trend still continuing?

A: “I disagree. During the last decade, China’s rapid economic development has strengthened the brand concept. Chinese consumers are more concerned about the “brands” themselves. But, at the same time, as the product of enrichment, there are many brands in each product line, so the preference of Chinese consumers to a particular brand is declining. Especially with China’s economic development, a number of domestic brands have grown up, rivaling international brands. For international brands, quality, service and other aspects of continuous improvement are based on the Chinese market.”

Packed Hall of the Global China Business Meeting 2010, at Congress Center in Luxembourg


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