Since 2009, China has been one of the fastest growing economies in the world at a rate of between 7 to 10.9%. This is attributed to the fact that subsequent government regimes have lessened restrictive measures that applied to foreign products and services for decades. As a result, this has led to a massive infusion of foreign products into the Chinese economy to the point where Chinese manufacturers have had to adapt them in order to keep their competitive edge both locally and abroad.
Understanding the Mindset of the Chinese Consumer
Key among the tastes and preferences of the Chinese consumer is the admiration that they have towards Westernized products. This includes products that come from the West as well as products that have been produced using technologies from Europe and America:
- It’s no wonder many big brands today have opted to outsource labor and resources from China since the country stands out as having a strong and robust local market which is favorable for its low production costs as well as its huge market of ‘generous’ spenders.
- The bulging middle class is also evolving in terms of sophisticated tastes and lifestyles.
- It will thus be noted that fashionable products and services would be an added plus if one wants their product to thrive in China.
- Of course, there are intricate details of consumer trends that tend to differ with class. For instance, the upper and middle class Chinese consumer finds it easier to adapt to the latest products and services as opposed to their salaried counterparts and laborers who constitute a considerable portion of the Chinese economy.
China has had to grapple with numerous counterfeits since many unscrupulous Chinese businessmen are always eager to expand their product variety in a market that’s currently experiencing knee-jerk competition. As the saying goes, if you can’t beat them, join them. That’s why many companies have opted to collaborate with these businessmen in order to avoid any conflict of interests:
- This includes signing agreements officially recognizing the counterfeit brand as a different version of the original brand, though lower in quality and value.
- Again, this strategy has served to increase market outreach to the low income consumers particularly in third world and developing economies in Africa, Asia and South America.
- Another major challenge applies to marketing logistics since you’re dealing with a billion plus consumers with divergent preferences.
- Auctioning of advertisement space is also a common phenomenon with rate hikes being experienced time and time again due to limited space as compared to the bulging number of competitors.
- Last but certainly not least, the Chinese economy is a country of polarized extremes in terms of wealth distribution.
- For instance, as laborers grapple with cut-throat job competition and rampant unemployment, they usually have to cope with extremely low incomes.
- Remember, the Chinese manufacturers know all too well that they’re spoilt for choice in terms of labor supply.
- This effectively reduces production costs and thus the profit gap is considerably high for the upper class which in turn polarizes income distribution for both extremes.
1. Create Consumer Awareness of the Product
Many distribution channels in China are run by the State. This would be a great start in creating basic consumer awareness.
- But remember, the Chinese consumers have varying tastes and preferences in terms of economic class. Therefore, to create awareness is not as simple as running an ad.
- There are principles involved depending on the target market you’re most interested with. For instance, many companies have opted to hire locals as sales representatives since China has many small shops that appeal to its locals.
- Ultimately, the marketing strategy should factor in the strong traditional roots and cultural values of the Chinese market.
2. Stimulate Product Demand
One of the best ways to stimulate product demand in China is to give out product samples and coupons in supermarkets and other retail outlets. There is also the option of launching a lottery with an impressive prize in mind. TV ads and Billboards can also do the magic:
- However, the challenge is to stay relevant in a market that witnesses a constant inflow of new brands every day.
- Consequently, many companies have gone a step further and incorporated a culture to the conscious Chinese consumer.
- Thus, the Chinese consumer is likely to stay loyal if for instance a British product also incorporates the British culture for that deep-rooted emotional appeal.
- But remember, you’ll have to narrow down your target market by understanding the media systems that define the advertisement and marketing industry of a particular consumer base.
3. Learn the Dynamics of Competition
Remember, you’re dealing with over a billion consumers with major income extremes. In fact, the Boston Consulting Group recently did a study of the Chinese market and talked of extremes that range from urban multi-millionaires to rural Chinese farmers:
- This goes to show you that generalizing on the Chinese consumer is practically impossible.
- BCG also estimates that there are roughly 30 million middle income households and 8 million affluent ones.
- You’ll thus have to understand the psychological and emotional facets that influence consumer behavior of varying class in order to tailor-make your products for the wide array of consumers.
- On top of that, most distribution channels in China are still state owned which means that you’ll have to understand the rules that define marketing mechanics from state to state.
See also: How to Market a Product in the US
Notably, the Chinese Middle Class has been growing as the upper and lower class dwindles. This should give you an idea as to the target market that would be most convenient and safe to begin with when it comes to marketing your product in China.