What Makes Chinese Consumers Tick?
May 19, 2012

The past few years has seen a rise in the west in the publishing of books related to the economy and business in China. While earlier it was mostly journalists who posted their observations on the Chinese market, today more and more first generation businessmen in China recount their experiences in one of the largest consumerist societies today. The three main books we at Inchin Closer have decided to talk about today are What Chinese Want: Culture, Communism, and China’s Modern Consumer by Tom Doctoroff, The End of Cheap China: Economic and Cultural Trends that will Disrupt the World by Shaun Rein,  All Eyes East: Lessons from the Front Lines of Marketing to China’s Youth by Mary Bergstrom.

To successfully do business in China, it is vital to know ‘what makes the Chinese people  tick’, explains Doctoroff in the first few lines. What Chinese Want explores the parallels between the culture and the purchasing patterns of the Chinese. Their culture identifies itself strongly with a Confucian respect for hierarchy: they prefer stability and social assimilation to anarchy and individuality, and this in turn determines their consumer behaviour. They are ‘standing out to fit in’, he says, and are deeply rooted in their tradition despite their fast- growing economy. Citing the popular example of the KFC chains in China, he taps into the methods the foreign company has used to retain its popularity among a people set in their ways. The simple step of localising the menu by including items such as the Golden Butterfly Shrimp and the Fragrant Mushroom Rice to adapt itself to suit the Chinese taste has ensured KFC unprecedented popularity there. Therefore, he says, the more the Chinese change, the more they remain the same.

Rein’s The End of Cheap China minutely observes the changes taking place at every strata of Chinese society. His work is a combination of personal experiences and empirical data. He analyses how the large- scale manufacturing made possible by cheap labour is now giving way to buying. The rising prices of labour will serve to radically change consumption habits around the world, with foreign markets being able to supply goods to China rather than producing them in China. This phenomenon has the potential to drastically cause inflation around the world, and the US, another major consumer, stands to lose out on the cheap consumption it has enjoyed thus far. Some companies cope with the End of Cheap China by building brands and charging more for their products; others by consolidating market share and becoming a volume player; and still others by converting factories to sell within China and other emerging markets,” Rein writes in his book.

Bergstrom has based her analyses from interviews with leaders of brands such as McDonald’s, Pepsi and Converse that have achieved economic success in China. Like Doctoroff, she has provided an interlinking of an extensive knowledge of Chinese culture, personal experience and consumer behaviour. Her book aims at helping western companies to better understand in order to connect with the young consumers in China.

All in all, these works show the inextricable link between Chinese culture and consumer culture and how it can be effectively exploited by foreign brands interested in tapping into the young, vibrant and bursting with energy consumer nation. Dispelling conventions and myths about the Middle Kingdom, these authors have successfully delved into their social psychology.

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