Chinese Consumer Behaviour PDF

Chinese Consumer Behaviour www.emba-bs.com  Understanding your target audience is essential, on and off line à Designing marketing strategies that fit your target user’s needs and preferences can make all the difference. In the past three decades, Chinese consu...

Chinese Consumer Behaviour www.emba-bs.com  Understanding your target audience is essential, on and off line à Designing marketing strategies that fit your target user’s needs and preferences can make all the difference. In the past three decades, Chinese consumers’ shopping habits have changed dramatically as incomes have risen and new products and concepts have entered the China market. Consumer habits continue to evolve today, and examining generations of consumers can reveal certain shopping trends Meet the China Buyer Presque impossible de le traiter comme un seul pays malgré les efforts du par7 communist local La base de la culture chinoise est l’uniformité àLangue àArchitecture àHabitude Revenu annuel moyen 36 400 RMB (4720€ annuelle) Grosse disparité: 58 000 CNY pour Shanghai et 16 000 CNY pour le Gansu On divise la chine et le marché en trois grandes catégories Tier 1:Megalopole comme Shanghai / Beijing / Shenzhen / Guangzhou Tier 2 : Wuhan, Qingdao, etc…. Tier 3 and tier 4: All smaller city Chinese Consumer Groupe Most consumption comes from first and second tier cities, such as Beijing, Shanghai, Shenzhen, and other urban areas in China with high per capita income and strong purchasing power. 60% of the population live in urban area The current Chinese consumer population can be separated into several groups with distinguishing characteristics: Chinese Consumer Group Frugal re)red Born before 1965, most of these Chinese consumers grew up in tough poliAcal and economic Ames, did not receive systema8c educa8on, and worked at state-owned enterprises. The difficult environment during their early lives made these individuals frugal and sensiAve toward changes in consumer goods prices Chinese Consumer Group Wealthy retired This group experienced difficulties similar to the frugal retired consumers, but wealthy retired individuals primarily worked in government and government-funded enterprises that provided higher wages and better retirement benefits. They are less price-sensitive and often value quality more than cost. In the next 5-10 years, spending habits of Chinese consumers who are older than 50 will change slightly. These consumers will increase spending on groceries as the government raises retirement pensions in line with inflation rates. Though they will consume healthcare and entertainment products, their children will likely buy these products for them. Chinese Consumer Groupe 50’s and 40’s These consumers, who grew up during the Cultural Revolution (1966-76) and early stage of the reform era, swing between tradition and new trends. These consumers generally save a large proportion of their earnings to take care of their children and parents. Chinese Consumer Groupe Thirties Many consumers in this group are well-educated and grew up in a more open environment than their parents. Compared with older generations, Chinese in their thirties save less, spend more on entertainment, and often shop online. They also pursue value and quality rather than low prices. These individuals will become the most important consumers in the next decade, buying for their parents, children, and themselves.  Chinese Consumer Groupe Twen)es From the one-child policy have opposite shopping habits from their parents. These consumers barely save and spend most of their income on entertainment, advanced electronics, and other trendy products. They o@en shop online and look for products that help dis8nguish their personali8es. As consumers in their twenAes age and start new families, their shopping habits may become slightly more conservaAve, though they will sAll favor high-quality and convenient products and spend more on groceries than previous generaAons.  Chinese Consumer Groupe New generation The new generation of consumers (under the age of 20) is the most Westernized and open to new products. à They are now facing new challenge with high unemployment rate These consumers pursue individualism and often use the Internet to follow global trends. Though most in this group do not yet earn an income, they significantly influence their parents’ decisions on food, clothing, electronics, and other purchases. Chinese Consumer Groupe Migrant workers Migrant workers (generally 25-45 years old) are rural residents who moved to the cities for jobs starting in the 1990s They can be even more frugal than elderly consumers, buying only the necessities and saving money to send remittances to their families in rural areas. Many migrant workers are expected to see a big increase in incomes and move their families to the cities in the future Chinese Consumer Groupe The rich There are more than 1 million Chinese with assets over $1.5 million, and the number is increasing rapidly. Rich consumers (generally 20-60 years old) are fairly concentrated in large urban areas, with Beijing, Guangdong, and Shanghai housing about half of this group. These individuals are successful entrepreneurs, top managers, and business owners. They pursue the best products available, particularly imports, and are the perfect candidates for marketing new products. Premium supermarkets have already emerged in China to provide high-quality products to wealthy consumers Retail Channels E-commerce has taken off, but traditional shopping and marketing hasn’t died. à Shopping in malls and standalone stores is popular and many Chinese people even (use to..) go abroad to buy luxury goods in person à Online shoppers are more likely to visit a physical store before making a purchase than shoppers in physical stores to visit an online store Convenience stores Most ci8es are saturated with convenience stores (7/11, Family mart…) Most local convenience store chains operate as small supermarkets with fewer stock- keeping units, higher prices, and no fresh produce. à Open 24/7 Hypermarkets and shopping malls Hypermarkets generate a steady cash flow for retailers and are popular with Chinese consumers, who like to spend time shopping with their families on weekends. H hypermarkets that include a shopping gallery with specialty stores and restaurants are particularly popular. As a result, many operators in this channel tend to build large shopping complexes with hypermarkets as their anchors and invite clothing retailers, restaurants, and entertainment operators to create a small shopping mall. Supermarket As the number of wealthy consumers rises in first- and second-tier cities, a demand for better quality lifestyles has emerged. These affluent consumers favor imported products, which are associated with high social status and a more leisurely lifestyle. Though most Chinese shoppers perceive hypermarkets as the place to find bargains, premium supermarkets, which offer more high- quality and imported products, are expanding rapidly in larger cities. Premium supermarkets are likely to open near high-end office buildings and in shopping centers in central locations and affluent residential areas. Many local retailers—such as Beijing Hualian Department Store Co., Ltd. and China Resources Enterprise, Ltd.— have already started testing this retail format. Fresh Market Discount Small discounts are better than none, Many Chinese consumers, particularly elderly shoppers, wish to save as much as possible. Retailers, especially hypermarkets, often cut prices of basic produce and price-sensitive items, such as eggs, pork, seasonal products, and local specialties. Retailers limit the amount of those products consumers may buy at a time to encourage shoppers to visit the stores more frequently These types of promotions have proven effective as many Chinese consumers are willing to wait for half an hour to save on a particular item.  Discount 9折 = 90% off ? No! 折 (zhé) does indicate the presence of discounts in Chinese. It comes from the verb “打折” (dǎzhé) which means to “give a discount”. 9折 you’ll pay 90% of the original price. DO: Remember a 1折 is a great deal. A 9折? Not so much DO: Get used to thinking “I’ll be paying xxx % of the price” and you’ll be fine! Gift Free Gift is very common à for example If you spend 79,90 RMB on Chao Neng products in this Chinese supermarket you will get this Branded Trolley for free Pricing Pricing is a sensitive issue Pricing a foreign brand in China can be tricky. - Chinese shoppers believe the higher the price, the better the quality or the higher the status. If a foreign brand is priced lower than a local one, shoppers may suspect that it has defects. - On the other hand, the premium price Chinese consumers are willing to pay varies by product category and by consumer groups The face: Key concept “Face” matters Chinese greatly value “face”, a quality associated with dignity, honor, and pride, and will pay more to save face. For example, when purchasing gifts for important friends and family during Chinese New Year, consumers generally buy gifts that are of the appropriate value for the receiver and pay particular attention to product packaging. Consumers that cannot afford a higher-quality gift will buy the product with the nicest packaging within their price range. In addition, consumers will pay more for gifts with fancier packaging, even if the product is of equal quality to a less expensive item. The face: Key concept E-Commerce E-Commerce China is very well connected; the internet penetration rate is about 70 % or 950 million users in 2022 (Xinhua.net). The country benefits from the size of its population but also from the fast adaptation of the new technologies like 4G and 5G without having adopted older technologies before. The digital market is supported by the Chinese Government who created five-years plan: The Torch Programme 国家⽕炬计划, to modernise and develop the new technologies which are considered a crucial sector for the industry and China’s Global position  E-Commerce The mobile is vastly present in the digital sector: 96,3% of the internet users. China has directly moved from no computers to the smartphones and many do not use emails or desktop anymore: everything goes through WeChat on smartphones (a Chinese app which we will talk more later). E-Commerce It has represented around 42% of the global E-commerce market in 2019 (McKinsey) and the online retail sales are 80% bigger than in the USA. 722,4M cyber shoppers who spend annually 2 388 USD (Business France 2019) Ecommerce platform Top China Ecommerce Platforms in 2022 5 ecommerce platforms still run an edge in the China ecommerce marketplace, dominating 80% of the market: Alibaba Group (Taobao & Tmall) PinDuoDuo Xiaohongshu JD.com (Tencent) Alibaba Group (Taobao & Tmall) à Taobao supports both B2C and C2C transactions, serving millions of product listings to China’s vast audience base. à As of 2021, it boasts 792 million+ monthly active users and sells 40K+ products per minute. Millennials to their 30s make up 70% of active users. By integrating social ecommerce functionality on Taobao, brands could leverage KOLs and content marketing to increase customer engagement and brand discovery. In addition, the platform launched out Taobao Live, which allows retailers to livestream product showcases. Alibaba Group (Taobao & Tmall) Tmall, the other Alibaba business, is China’s largest B2C ecommerce platform, accounting for 51% of all B2C transactions. It’s a virtual shopping hub that hosts over 180,000 international brands, such as Dyson, Chanel, Dior, and many more. It has over 780 million monthly active users. To help marketers engage with Chinese consumers, Tmall launched Flagship Store 2.0, featuring Tmall "mini-stores," store lofts, fan club, and 3D shopping. à More focused on High end product (Clothing and cosmetics) à Good solution but very expensive (Arround 15 000 Euros minimum to start) JD.com JD.com is one of the China’s leading one-stop ecommerce platform, holding a commanding 16.7% of all Chinese ecommerce sales. Partnering with Google, Tencent, and Walmart, JD.com’s expansive reach caters to over 550 million Chinese consumers, offering direct access to a wide range of authentic and premium products. JD.com offers three types of stores: Direct Sales for B2B & B2C transactions, JD Marketplace for third-party sellers, and JD Worldwide for cross-border prime goods. Similar to other China ecommerce platforms, JD Worldwide allows international brands or retailers who are legally registered outside China to build JD stores and sell directly to Chinese online shoppers. Trendy and recommended products are displayed on the search result pages. To ensure your JD store gains considerable traffic, brands should make their JD storefront appealing and presentable. It’s also a good idea to use eye-catchy banner ads and offer discounts to draw attention to your product’s features and functionalities, accordingly, boosting sales. à Focus more on technology and high-end fashion PinDuoDuo Compared to other ecommerce plahorms, females aged 30 to 49 in 3rd 8er ci8es or beyond make up roughly 60% of PinDuoDuo demographics. Also, the average order value is only 6 USD, far below other ecommerce plahorms. For brands targe8ng price- sensi8ve middle-aged groups, PinDuoDuo would be your ideal plahorm to engage in. It’s intended to incentivize users to share products on social media like WeChat and QQ, to form a “shopping team” to unlock a price chop for their purchases. The bigger the team, the bigger the discount. Xiaohongshu Authenticity is core to Xiaohongshu. Together with the “shopping notes” that generate favorable word-of-mouth marketing on the platform, users have access to a strong community of UGCs, which serves as a reliable source for product or brand information. Brands can raise brand awareness and build a tighter, deeper association with current and potential Chinese consumers. RECAP: Omnichannel Retail may Lead China Ecommerce Omnichannel retailing is no longer a strange concept. When Alibaba and JD.com both embrace the omnichannel solution for their ecommerce businesses, you can be sure that omnichannel retail will be a big ecommerce trend in 2023. Consumers nowadays hunger for a quality user experience. They encounter your brands or products through multiple touchpoints, such as social media, in-store, or ecommerce sites. So, the capacity of each channel to mesh together to guide customers through the entire customer journey will be vital. Wherever the customer goes, omnichannel retail connects those fragmented experiences and integrates the segmented components into a unified whole, offering a seamless and consistent purchasing experience. General trade and cross-border e-commerce platforms The Chinese e-commerce ecosystem is very developed no matter what type of trade foreign brands wish to be involved in. But before we go into the technical aspects of each, let’s get familiar with the terminology: General trade e-commerce refers to the unilateral import or export trade of enterprises with import and export rights in China. It involves goods imported and exported according to the general trade transaction mode and are general trade goods. Cross border e-commerce refers to an international business activity with transaction subjects belonging to different customs areas within Special Economic zones, where purchase orders, payment, delivery, and other transactions are completed through cross-border ecommerce and logistic channels. How Much Does It Cost to Sell Products on Leading E-commerce Platforms in China? Different E-commerce platforms in China require different levels of investment. Some Chinese E-commerce platforms take a commission from the sales you make and also charge for platform usage fees, template fees, marketing tool fees and deposits. When opening a flagship store on Tmall, it requires an average investment of 30,000 USD (dependent on the type of commodity, as it can vary from 20,000 to 100,000 USD). Minimum monthly sales volume of the store: One million RMB + Marketing Costs To try and reach one million US dollars in sales per year, it is likely that you will need to spend at least $10,000 USD each month on marketing. This means roughly 12% of your gross income will go into advertising. Managing a business on JingDong (JD.com), can be as expensive as Tmall, or even more. Enterprises will have a commission of 4-6%. Local businesses will be expected to pay 1,000 RMB /150 USD as a monthly platform usage fee, whereas foreign enterprises will be paying 1,000 USD per month. However, the store design template is free. Lower safety deposit JD also has a lower safety deposit (10,000 – 100,000 RMB depending on the industry, and 100,000 RMB applies for high-risk products such as cars, electric bikes, etc.) PINDUODUO This plaGorm is probably the most cost-efficient as no commission is collected from retailers for using the plaGorm. Safety deposit Safety deposits are also very low, with a maximum payment of 10,000 RMB/1,500 USD. It is free to enroll and the adverKsing on the plaGorm is sKll reasonable XIAOHONGSHU It will cost 300 RMB annually to use this platform. The safety deposit is around 20,000 RMB/3,000 USD. In order to use advertising on RED, another 20,000 RMB shall be charged to the ads account. TAOBAO It will cost 300 RMB annually to use this platform. The safety deposit is around 10,000 RMB/1,400 USD. You will also need to purchase yearly design template package that could vary from 20-100 USD per year. Kaola Coming in second, after Xiaohongshu by Monthly Active users (7,6M), this platform is female oriented (>80%), with a market share of more than 27.1% in year 2020. Owned by NetEase and backed by Alibaba, this platform brings tons of traffic to the brands listed on it. It will cost 6000 RMB annually to use this platform. The safety deposit is 15,000 USD. Commission: 2-10%, based on product category Should I Localize My E-commerce Website into Chinese? Many brands started their market entry via localizing their e-commerce websites in China. Nespresso, Ikea, and most luxury brands took that road. But as it turned out, Chinese customers are very suspicious when it comes to purchasing products on official websites (excluding luxury brands), especially when it comes to payment processes and returns. The two ecommerce giants Tmall and JD had popularized their payment experiences (almost seamless), delivery times, and 7- day product returns, making this almost a “national e-commerce standard” that now Chinese customers are expecting either the same exact conditions or better ones (if at all possible). Should I Localize My E-commerce Website into Chinese? à This has led to the majority of the Chinese population developing an e-commerce habit. Jack Ma called it “e-commerce lifestyle”. Not only people would go to e-commerce apps to search for products to buy, they would also just window shop, look for entertainment, and even play games. à Seeing these and other reasons, Nespresso and Ikea both had to create Tmall flagship stores, as this channel is not only the gate opener to the largest online traffic pool, but is also a way to improve their brand recognition and brand engagement. à It doesn’t mean that brands shouldn’t have any type website. How to Choose the Right E-commerce Pladorm for Your Brand? Not sure how to choose the perfect e-commerce plarorm for your brand? Market research. This is perhaps the most important task of all. Seeing what market share your brand can take in the Chinese market, and learning who your direct and indirect compeAtors are. Investment alloca8on. Big Chinese ecommerce plahorms are not for every brand. Brands need to be smart about how to use their resources in such a complicated market as China. Will smaller brands bring as many business opportuniAes? How can your brand outrun the exisAng compeAAon? When is the right Ame to launch your brand in China? All these and lots of other quesAons must be answered when your brand does the due diligence research. How to Choose the Right E-commerce Platform for Your Brand? Branding and brand localization. Once you have made the call, you need to prepare your brand for the Chinese market. How will the customers pronounce your brand name? Would this name be available for trade mark registration? Where can the customers find information about you? Perhaps you have seen the examples of some lesser known Chinese brands selling their product on Amazon, that use auto translation for their product description. Make sure this doesn’t happen to you in China! Localization of foreign brands done by professionals is crucial for the successfully entering the Chinese market. Social Network As 2020, 72% of the Chinese population are active social media users On average, each Chinese owns 9.3 social media accounts. The average time spent on social media in China is over 2 hours in a day. Over 60% of web traffic comes from mobile phones in China  WeChat reached 1.26 billion monthly active users in 2022 (Basically the whole Chinese internet population) Messages:38 billion messages are exchanged daily, almost like WhatsApp (55 billion) Videos: 68M videos are uploaded every day on WeChat 330 millions monthly active users for video calling Mini-programs: Over 450 million active users per month Weight of mini-programs:70+ million mini-programs (95% of e-commerce brands have one) Average time spent: Chinese users spend 82 minutes on WeChat daily Frequency of daily use: 60% of WeChat users open the app more than 10 times a day Wechat Official Accounts WeChat Official Accounts are the Chinese equivalent of a brand’s Facebook page. They provide a way for businesses to communicate directly with their Chinese audience. According to recent research, 49% of the WeChat users would share an article on their moment if they believe it’s useful. Publishing valuable and compelling content on Wechat can: Enhance your brand image increase customer engagement and convert your followers into buyers. Among all forms of content, video format proves to be the most popular and effective on Wechat à One of the main points of Wechat business accounts is that they allow you to share and push content to your Chinese followers. WeChat mini-programs WeChat mini-programs are essentially apps within the WeChat app. They enable more advanced features than what is available in the standard WeChat app. This includes things like ordering food, making appointments and paying for goods and services. They are becoming increasingly popular in China, as they offer a way to do more without having to leave the WeChat app. This makes them very convenient and user-friendly. Example: Lancôme has set up a WeChat Mini Program Mall Apart from launching mini-program exclusive products and sending out samples, Lancôme also built a WeChat community where it provides beauty advice, skincare science, point-burning privileges, etc. In 2020, Lancôme sent out 400,000 samples, with a repurchase income of more than 10 million yuan. Through a constant social presence on wechat, Lancôme managed to retain customers’ loyalty and reinforce their sense of belonging and recogni8on. As a result, the GMV of Lancôme's mini-program official store climbed by 97% year over year. KOLs Promotion Key Opinions Leader’s campaigns are a very common way to promote products in China. Brands leverage popular Wechat accounts of KOLs who have huge followings to spread the message. This is a technique we will see being used over and over in every single Chinese social media platform. Wechat Advertising Like all China Social Media, Wechat has a paid promotion option. Wechat ads include Moment ads (shown on Moments) and banner ads (blended into targeted articles) to increase the reach of brands. Wechat is the biggest social network in China. You need to be on it, this is a no-brainer. It is in fact so big and integrated into Chinese people’s lives that it is in a category of its own. It gives you a direct channel of communication with the Chinese audience and your potential customers. à Wechat is however not necessarily the best place to promote to Chinese consumers. But as an advertising platform, it is somewhat limited. Its business model is not reliant on ads revenue. Consequently, it isn’t the platform’s main focus. https://mp.weixin.qq.com/s/MYB3DqFogCMfUc8wPNkyqA SINA WEIBO – The chinese Twitter? Weibo is one of the oldest Chinese social media sites. The micro-blogging platform describes itself as an open social media platform. More than Wechat where people not only post, share and interact but also get updated on trends and news. Sina Weibo facts & User Statistics Weibo active users: 573 million (2022) Daily active users: 249 million (2022) 94% are mobile users (400+ millions) Created in 2009 82% of Weibo users shop online Content marketing on Weibo Like on any Chinese social media, brands can create their accounts and post interesting content to attract and engage followers. Once articles are read by a certain number of users, they can gain popularity on the hot-topic or super-topic community forums. Videos and live streaming Weibo has its own live stream platform, called Yizhibo live, which quickly rose to popularity after its release. It has attracted KOLs and celebrities to do product and service promotions. E-commerce integration Brands can link Taobao stores and products in their posts. With many users already having Alipay linked to their Weibo accounts, they can purchase featured products with just one click. Therefore, Weibo can be very effective in driving online sales. Weibo stories One of the most recent features on Weibo is the stories feature. It’s very similar to Instagram stories but as of now, only verified official accounts can post a story. Sina Weibo Paid to advertise As a social networking platform, Weibo is great but the app is much more than that from a pure marketing point of view as its native ads system is well developed. The varied public allows marketers to reach various niches at a reasonable price. XiaoHongShu (Lihle Red Book) It’s mainly used by young people in China to share photos and videos of the clothes they’re wearing, the food they’re eaAng, and the places they’re visiAng. This social media is a great tool if you need to market to Chinese women. Why? Because 80% of the community on Xiaohongshu are women. Created in 2013 Over 300 millions registered users 150 millions monthly acAve users in 2022 80% Women audience Young Audience, 70%+ of users are Millennials Wealthier audience, over half of users live in 1st and 2nd Tiers CiAes (Shanghai, Beijing etc.) Has e-commerce capabiliAes within the plarorm Chinese influencer marketing (KOL Campaigns) As Instagram does, Xiao Hong Shu is filled with influencers monetizing their audiences. The difference with some other platforms such as Weibo is that here you have them listed and available within Little Red Book itself. The fact that the social media company is directly involved in this business helps to avoid some of the pitfalls that sometimes happen when dealing with influencers. Official Xiaohongshu Business Accounts You can create your own company account and share your own content. Having a business account gives you access to the app KOL network but also to their integrated eCommerce feature. On top of that, all reviews can be linked directly to your verified account, great for “recommendation” marketing. Advertising The platform offers several types of ads to show promotional offers. Mainly those take the form of banners and popups. Advertising follows a strict set of rules on the little red book as the app wants to stay loyal to its core: a genuine review. Wrap-up – why use Xiao Hong Shu? XiaoHongShu is a smaller social network compared to some other big names on our list. But it offers a very focused community of young women. If that is your target audience, then it might just be the perfect platform for you to invest in. Douyin (TIKTOK) #1 short videos platform in the world and in China Created in 2016 Monthly active users: over 800 million (2022) Daily active users:over 600 million (2022) The number of users increased by+200% in only 2 years Average time spent on Douyin:45 minuter per day 57% of the Douyin/TikTok worldwide users are in China Douyin allows users to create and share creative and trendy short-form videos. Short videos are, unlike long- form videos, optimal for engagement and virality. Douyin also offer brands the opportunity to have a business account that comes with many benefits such as access to paid advertising tools, better visibility, and the possibility to publish longer visibility than regular users’ account. Les Fêtes en chine Many celebrations = Consumption peak! CNY: Chinese new year Autumn Fes8val Qing Ming (04/04) Endless celebration in each region - Dragon boat festival - Fishing festival - etc…..  CNY: Chinese new year This year: DRAGON! February 10th 2023 Comsumption pick early January Les symboles en chine China is full of symbol China is full of symbol Real case! Product Variety In the past, function and price were the factors Chinese consumers cared about most. à Consumers are becoming more sophisticated and are increasingly taking a variety of criteria into account. They’re trading up from mass market products to premium products. à As living standards improve, people are focusing more on products with high quality and good taste. For example, Chinese consumers are more health conscious and concerned about food safety issues so health food consumption is increasing. Product Variety Customer are allocating more of their income to lifestyle services and experiences At the same time, spending on food and beverages for home consumption is stagnating or even declining. à Foreign brands still hold a leadership position in that premium market. à What’s more, a rising proportion of Chinese consumers focus on a few brands, and some are becoming loyal to single brands Adaptability You need to consistently adapte your product! McDonald’s Corp. tried to promote its beef burgers when it first entered China in 1990. After realizing that chicken and pork are more popular in China, the company adapted to consumers’ unchanging habits and launched a menu of chicken burgers. Chinese shop more frequently than westerners Chinese people shop more frequently than their western counterparts, especially North Americans who tend to stock up every week In China, people are more inclined towards shopping daily for fresher products or even shopping right before cooking meals. Chinese shop more frequently than westerners à Smaller wet-markets and convenience stores get comparatively more foot traffic in China than big supermarket à For the Chinese, getting fresh produce at a nearby market on the walk back from work is more convenient (People don’t “live” by their car – most of them are living close to small market) à Most of shop are open 7/7 What role does customer service play in China ? One big difference between Chinese and western consumer habits is their expectations from customer service. Chinese consumers find it important that the service they receive is tailored to their individual needs. Whereas, in the West, consumers appreciate the self-service shopping experience and contact vendors only when something is going wrong. In some stores like Watsons where consumers are greeted upon entering the store, and staff gives product recommendations based on the immediate impression of the consumer profile. Chinese customer service can boost sales by salespeople being both assertive and aggressive in suggestions à CF TAOBAO Brand loyalty in the west vs. China The whole concept of loyalty to brands is relatively new in China, except for luxury brands which are used mostly for the status symbol, Chinese people are yet to build an affinity for one brand but they are brand conscious. it just means that Chinese consumers don’t look necessarily for any brand when they are shopping, allowing both foreign and domestic brands to cultivate stronger ties through effective marketing. Global Brands vs Local Brands The market is saturated with international brands and local brands. Consumers are becoming more and more picky and have higher expectations. Consumers formerly made choices based on the popularity of a brand but now, more attention is paid to personal preference and value --> Driven by communist party Global Brands vs Local Brands For beverages, local brands are more popular, but most consumers trust foreign brands when purchasing childcare and cosmetic goods. According to Nielson’s 2019 Consumers Report, 53% of respondents tended to buy international brand cosmetics, while only 19% of people would choose local brands. Word of Mouth Opinions from other consumers seem more important than before to influence purchasing decisions. By only spending a few minutes on reviews and comments on e-commerce apps, consumers can find out about the product and service. Social recommendations are more powerful than traditional advertisements. KOL are playing an important role in consuming behaviour Typical Consuming behaviour Five consumer trends shaping the next decade of growth in China 1. China’s rising consuming class is an engine of global growth in many categories By 2030, 60% of urban consumption is projected to be driven by upper- middle-income consumers (with annual household incomes ranging from 160,000 CNY to 345,000 CNY), compared with 35% today in our baseline scenario. By 2030, it may be home to about 400 millions households with upper-middle and higher incomes—as many as in Europe and the United States combined.1 àOver the next five years, it is estimated that the number of millionaires in China may double, from around five million today to ten million in 2025. 2. Urban consumers are concentrated in China’s largest cities, but the next tier of cities could fuel the future Consumption is driven by the 30 largest cities, but new hotspots are emerging. China’s 30 largest cities are home to 25 percent of the nation’s population, who drive 45 percent of total household consumption. Consumers in these cities have considerable purchasing power, spending 80% more on a per capita basis than the national average Today, tourism is a large part of the local economy in major cities such as Beijing, Chengdu, and Chongqing. Revenue from tourism-related sectors is equivalent to more than 20% of GDP in these cities, compared with a national average of 7%  2. Urban consumers are concentrated in China’s largest cities, but the next tier of cities could fuel the future Housing affordability is a common challenge across most Chinese major cities, limiting consumers’ spending power and shifting them to rentals For now, many residents of China’s largest ci8es are shi@ing to ren8ng rather than owning property. The renAng populaAon increased from 11 to 14 percent of the overall populaAon between 2012 and 2019, a trend largely occurring in major ciAes The top ten cities outperform in public services such as healthcare and education. Critical public services such as healthcare and education continue to be strongest in China’s largest cities 3. Changing consumer attitudes are driving the growth of Chinese brands Brand preferences are shifting. In the past, Chinese consumers put a premium on foreign brands, but this tendency has changed in recent years. The notion of guochao a desire to buy Chinese goods and services in order to connect with local roots and producers has come to prominence. Support for products “made in China” has led to the emergence of significant local players in some categories. Baidu searches for Chinese brands increased from 38 to 70 percent of all brand searches between 2009 and 2019, with millennials leading the way in domestic purchasing. 3. Changing consumer attitudes are driving the growth of Chinese brands The rise of local brands is broader than simply guochao. à It is also driven by Chinese products becoming more competitive through attractive design, enhanced features, and improved performance. à The Chinese market is vast enough to support both homegrown and foreign brands, as long as producers understand and deliver on what consumers want. 4. China’s digital consumers are creating vast pools of data China’s vibrant digital ecosystems are steadily increasing their share of the country’s economy, and the boundaries between the physical and digital are con8nuing to blur. Chinese technology players have created innovaAve business models, especially in all types of e-commerce, digital payments, food delivery, healthcare, and mobility services. à Super apps are now well established and mainstream in China and further advanced than in most other markets. Chinese consumers have been enthusiasAc adopters of digital innovaAons. We can es8mate that at least 2/3 of seniors could be online by 2030, up from around 40 percent today. 4. China’s digital consumers are creating vast pools of data Companies need to ensure they are managing data in line with consumer needs and regulatory requirements. Data privacy and protection are currently a major concern for consumers and regulators in China (and across the world). There is a large opportunity to create value from consumer data, which survey evidence suggests that many Chinese consumers are willing to share. A 2021 Euromonitor survey found that over 45% of respondents in China said that they were willing to share data for personalized offers and deals, a significantly higher share than respondents from North Asia, the United States, and Western Europe at around 25% 4. China’s digital consumers are creating vast pools of data Nevertheless, recent regulatory action in China, including new data protection policies in 2021, has required many companies to rethink and review their handling of consumer data. --> They may need to renew their focus on delivering the right value for consumers in a way that balances their interests and meets their desire for personalization, while at the same time complying with regulation. 5. Chinese players are at the forefront of the shift toward new market- specific consumption curves Multinational companies have historically looked at emerging markets through the lens of rising incomes. Income-driven S-curves have occurred across many consumer categorie: The penetration of a given product rises slowly until the tipping point when incomes are sufficient to support a steep upward curve in consumption. 5. Chinese players are at the forefront of the shift toward new market- specific consumption curves Once penetraAon is high, growth tends to plateau. However, a combinaAon of business model innovaAon, technology-driven unit cost decreases, and new buying behaviors is rewriAng consumpAon pauerns in the region. Consider, for example, private-vehicle-based mobility: The penetraAon of car ownership follows a well-established S-curve, experiencing a sharp increase when countries reach sufficiently high incomes. However, new mobility soluAons such as ride hailing have a different profile. Penetra8on is much less dependent on income; consumers who cannot afford to own a car can access rela8vely inexpensive rides. Example of consuming behaviour Things to remember Things to remember: 1. Online Shopping and E-commerce Dominance: Chinese consumers have been increasingly relying on online platforms for shopping. E-commerce giants like Alibaba's Tmall and JD.com have played a significant role in shaping consumer habits. 2. Digital Payments: Mobile payment systems, such as Alipay and WeChat Pay, have become integral to daily life in China. Cashless transactions are widely accepted, even in small businesses and street markets. 3. Tech Integration: Consumers in China are early adopters of new technologies. Augmented reality (AR), virtual reality (VR), and other tech-driven experiences are common 4. Health and Wellness: There has been a growing awareness of health and wellness, leading to increased demand for organic and health-conscious products. Consumers are seeking products that promote a healthy lifestyle. 5. Sustainability and Eco-Friendly Choices: Environmental concerns have gained prominence, and consumers are showing an interest in sustainable and eco-friendly products. Brands that prioritize environmental responsibility are gaining popularity. 6. Rise of Local Brands: Chinese consumers have shown a growing interest in supporting local brands. This is partly driven by a sense of national pride and a desire for unique, culturally relevant products à Guochao 7. Experience-driven Consumption: Rather than just buying products, there's a trend towards experiences. This includes experiential retail, unique dining experiences, and other leisure activities. 8. Cross-Border E-commerce: Chinese consumers are looking beyond domestic products, and cross-border e- commerce has gained popularity. This trend is driven by a desire for quality and unique products from international markets. 9. Influencer Marketing: Key Opinion Leaders (KOLs) and influencers play a significant role in shaping consumer preferences. Influencer marketing is a powerful tool for reaching and influencing Chinese consumers. 10. Premiumization: With the rise of the middle class, there's an increased demand for premium and high-quality products. Consumers are willing to pay more for brands that offer perceived value and quality. At present, consumption returns to rational pragmatism. Consumers are beginning to look at their needs and prioritize them, like reducing pseudo-needs and paying for real ones Due to economic situation, In the next 1-2 years, after cutting unnecessary expenses, consumers will return to the value of the product itself. Consumers are also characterized by a focus on the added value of products. Brands need to emphasize the added value of their product to strengthen, such as functionality, experience, social attributes, or whether it can bring positive feelings and long-term returns or not. Golden Rules when selling your product to Chinese Golden Rules when selling your product to Chinese 1) Make sure your product fit customer requirement à You can custom your product 2) Make sure your packaging is top of the line 3) Choose the right target, get support from local agency 4) Choose the right KOL or selling platform (TABAO / TMALL / WECHAT…) 5) Never underestimate symbol and social habits, they are powerfull tool to use 6) Outdoor / Sport / Tourism / Organic product are long term trend to be focused