Traditionally, China has been seen as a low-cost manufacturing country. It is now the biggest exporter in the world. It is predicted that China will grow to be the second largest economy in the world by the end of 2010. Immigration from countryside to the cities has been notable and the salaries have increased steadily. The purchasing power of Chinese people has improved and they want to buy.
But how is the Chinese consumer? Chinese consumers have typically chosen their purchases among well-known brands more eagerly than other nationalities. Lately, they have started to compare the product features of different brands and expect better value for their purchase. Of course internet helps in finding more information on the products in the market and consumers may exchange user information as well. The popularity of online shopping has also increased as not all of the products can be found in the shops. However, the online payment is still considered risky if the service provider is not well known.
More and more Chinese consumers have adopted ideas from green thinking as well. According to a survey conducted by LEK Consulting, new parents and young people are increasingly buying green products. However, eco-friendliness seems to matter less when it comes to the product’s safety and price. But, if there is the safety and the price on the scale, the safety wins the bargain.
In summary we can identify the following facts of Chinese consumers:
- Consumption is increasing
- Price/quality value counts more than the brand name
- E-commerce is a growing trend
- Right combination of eco-friendliness, safety and price may determine the future winning brands
In my previous trip to China I noticed that the amount of huge shopping malls has increased notably. The cheap market places still exist and are popular, but the quality and safety of the products there are considered worse than those in the shopping malls. Food producers advertise the cleanliness of their products as the industry has suffered from the scandals like the poisoned milk killing people in 2008. The growing purchasing power and number of millionaires can be seen in the cities. Stores of Ferragamo, Prada, Cucci and Versace are big, bright and tempting. Between the Beijing taxis, Chinese Audis and city jeeps, you may spot Jaguar, Bentley or Porche. Oh, and who are those people that come out from Louis Vuitton shop in Helsinki’s Esplanadi Boulevard with heavy bags hanging on their arm? I bet they are our neighbors Russians, and the wealthy Chinese tourists.
You haven’t been back in Beijing for a while, Johanna, a shame for all of us here who miss you. But when you do, you’ll see those glitzy malls are empty, save for the food courts. I agree Chinese consumers are trending towards quality, but there is a serious glut of mega-brand outlets, and a paucity of consumers willing to spend recession-time discretionary income in them.
Honey, I was in China Nov-Dec 2009 for 3 weeks
. But somehow managed to miss seeing most of my old friends. Sorry for that hon, but next time you’ll be the first one in my priority list.
Anyway, thanks for your comment. When it comes to luxury brands, it’s not about the quantity of the customers but the quality. Those that can afford buying Louis Vuitton, Chanel, Cartier etc. they buy despite the recession. And they are happy to show they are doing great. The annual sales of luxury goods has increased steadily and will keep on growing in China.
However, when it comes to very rich consumers, they don’t seem to be very quality oriented. They rather look at the price tag. It’s the middle class and younger generations that compare the features of the products and demand more value on their purchase. In Finland we have a saying that poor person can not afford of buying cheap things. I think that pretty much crystallize the point
.