It wasn’t long ago when virtually all Chinese consumers assumed the more expensive a product, the better quality it must be. Marketers would create premium brands just by raising prices, and in many cases, they’d actually sell more than if their prices were lower. While many Chinese consumers still associate higher prices with better quality, this can no longer be taken for granted.
As Chinese consumers increasingly travel abroad, or simply look online to compare prices overseas, they are becoming more aware of when they’re being rorted. You just need to check social media to see the latest exposé about Chinese consumers being fleeced, from Starbucks charging 75% extra for a cuppa than in America to a pair of Nike kicks costing 500 kuai ($82) more than overseas. While higher prices can sometimes be attributed to the additional costs of doing business in China, the Chinese Government doesn’t look fondly on significantly higher price tags either. For those brands who have been singled out and crucified on state-run media, winning the hearts of Chinese consumers becomes a much tougher road. Just ask Nike how their sales have been in China lately.
Chinese consumers are maturing quickly. They’re still prepared to pay a premium for quality, but it doesn’t come unconditionally. Your brand needs to tell a story that resonates with Chinese consumers to justify the big bucks. The increasingly discerning Chinese consumer is looking for value more than ever, and that isn’t always always associated with the highest price. While it’s most prevalent in Tier 1 cities, we’re also seeing value increasingly becoming the most important purchasing factor in China’s smaller cities as well.
Speaking of value, China Skinny is pleased to announce a strategic partnership with British-headquartered research agency CrowdDNA. The partnership will see our two agencies share methodologies and resources across our respective markets. The synergies will ensure China Skinny continues to evolve with China’s constantly changing market, so we can carry on providing great value in our research and insights-focused marketing strategy and execution services. More about our partnership here. As always, there’s more news and views below, we hope you enjoy it!
The Science of Choosing Which Chinese Cities to Target: Shanghai, Beijing and other big cities in China are some of the most contested markets in the world, and may not be the most profitable markets to focus on for your products and services. Here are some insights into Chinese cities that may surprise you.
Winning in a Transitional China: An 18-page report from AmCham, finding ‘value as a differentiator’ and the ‘ rise of digitization’ are seen as the top two trends influencing the Chinese consumer.
Five Things Marketers Get Wrong About China: A 17-minute vid with some good observations into how Chinese consumers have evolved. Ten years ago 41% of Chinese were happy with how things were going, and wanted things to stay the way they are. Today, it’s 61%. Home is becoming more important to Chinese, as is an appreciation for what is earned, adventure and experience. Consumers also want to understand and trust the brands they’re buying.
The Chinese Want Quality, Too: Chinese consumers are getting friends and strangers together over social networks to negotiate better group buying rates for furniture and a slew of other products. Emphasis on quality is particularly pronounced for 31-40 year old consumers.
Exporters Too Naive About China: Too many exporters are over-reliant on distributors and underestimate the power of their country’s brand.
Today’s Alarming Japan-China Charts: While some foreign brands have taken a hit lately in China, it’s nothing like Japan as a whole, which has seen favourable impressions sink like a stone. Let’s hope hosting the 2019 Rugby World Cup and 2020 Olympics can help Japan’s brand in China.
Chinese Shoppers Set To Become World Leaders Online: eCommerce could account for half of China’s retail spending within 10 years. Online sales now make up 7.3% of consumer retail in China. Growth averaged 71% a year for the past 4 years.
Apple’s iPhone 5C misses the low-cost mark: Apple has unveiled its new iPhone devices, including the lower-cost 5C, in hope of expanding beyond the premium end of the lucrative China market. With unsubsidised prices starting at ¥4,488 ($733), costs are still high relative to feature-packed mobiles such as Xiaomi. Apple has ensured the low cost iPhones, available in strawberry red, blue, lime green and yellow, look distinctively cheaper than the 5S, ensuring that owners of the higher-priced 5S can still show off their status.
Lenovo, Taking Page From Apple, Chases Samsung in China: Although not quite as sleek, Lenovo is following Apple’s lead by opening specialist stores.
HTC Will Reportedly Roll Out its Own Mobile Operating System Specifically for Chinese Consumers: HTC developing its own China-focused operating system for Android, hoping to break some of Android’s dominance in the market. Interestingly, there’s a lot of talk of Weibo integration, and nothing on WeChat. A few years too late?
China’s “Seven Base Lines” for a Clean Internet: The Chinese Government has announced seven baselines for the ‘mutual building of a favourable online environment’, to stop false and destabilising information such as the frenzy of salt buying after the radiation rumours in 2011. Baselines are: Laws & Regulations, Socialist System, National Interests, Citizen’s Legal Rights & Interests, Public Order, Moral Base Line and Information Accuracy. Best to stick to those, as you can face three years in prison for sharing false information online that is defamatory or harms the national interest. On the subject, here’s an inside look into China’s online censorship, its tools and 2-3 full time censors per 50,000 users.
Vineyards Pour Billions into Chateaus: Chinese aren’t just faking wines, they’re now building faux ‘European’ towns and chateaus around wine regions. 160 are already built and another 200 are under construction in a bid to raise the marketing and standard of Chinese wine. Wine imports in the first half of 2013 grew 20.9% in volume and 8.2% in value.
China Online Travel Market Up 29% in Q2 2013: China’s April-June online travel revenue grew 29% from 2012 to ¥50.9 billion ($8.25b).
Seeking Edge in Academics, Chinese Spend Summer in U.S.: An estimated 100,000 Chinese students, some as young as 10, did their summer school, camps and tourist attractions in the USA this year, paying $5-$15K for several weeks of USA-experience.
China’s Consumers Take Eagerly to Credit: Chinese are borrowing more, especially the young ones. Household debt has tripled since 2008. Between 2008-2011 average household debt rose from 30% to 50% of disposable income.
What Do you Need to know as a Fashion Brand about the Chinese Consumer?: Know your target market, what makes them tick and speak their language to influence Chinese consumers on Weibo.
Chinese Investors are Buying more than a Quarter of London’s New Homes: London prices keep rising, 8.1% up in June from a year ago, helped by surging Chinese demand. Chinese spent $266 million in the first 6-months of 2013, 60% for investment purposes. Chinese accounted for 17% of total transaction value in 2012.
Daimler’s Mercedes-Benz to outline strategic plan for China: Mercedes will introduce 20 new or upgraded models in China over the next 2 years in hope of growing sales by a third by 2015.
Adultery Website Is About To Enter China, Where Demand Is Already Huge: Apparently there’s a lot of pent up demand from Chinese wanting to find a mistress online.
That’s The Skinny for the week! China Skinny would love to discuss how we could help with your marketing, online initiatives or research to take advantage of China’s opportunities. Just email us at firstname.lastname@example.org or call us at +86 21 3221 0273 so we can learn more about your objectives and let you know how we can help.
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