Being successful in today’s China is about more than just generating net revenues; it is about maintaining or even expanding market share, which requires engaging a critical mass of customers, says Marina Yue Zhang in ‘China 2.0’ ( >www.wiley.com ).
Brand loyalty may not yet be strong for many products and services because of the different developmental stage of Chinese consumers, she adds. “China is not a unified market; Chinese consumers are spread over 30 provinces and regions with distinct lifestyles, cultures, languages, and of course tastes for consumer goods.”
An interesting categorisation of consumers is on the basis of ‘collar’ – as white, blue, and black. The first is about the growing middle class, a segment that buys most of the consumer goods and services. This is the ground where the author finds fierce competition among multinational and domestic companies.
However, the strategy of focusing only on the middle class is not sustainable, she opines. “Multinational companies must develop effective measures to tackle the mass market. Increasingly unprotected by special privileges and preferences previously provided by the Chinese government, these firms will need to move their attention to creating and sustaining value for customers, using more China-specific strategies…”
The ‘untapped blue collar class’ is the long tail of the market, describes Zhang. The lower-income segment that makes up around 90 per cent of China’s consumers is highly price-sensitive and can decide a company’s long-term fate in China, she notes.
A major stumbling block is that consumption can be low, even as savings for contingency are high, among rural residents. Compared to about 60-70 per cent of GDP coming from domestic consumption among major developed nations, domestic demand in China accounts for only 35 per cent of GDP, the book informs.
Surprisingly, though, China’s rural market could be the fuel for rocketing auto sales, backed by government subsidy of 10 per cent on cars for farmers, as a story dated January 18 states in http://english.cctv.com. Citing statistics that there are 40 million motorcycles in rural China, and 20 million farming vehicles, CCTV sees the potential for a huge business in getting these drivers on the four wheelers. “But analysts warn that auto makers have to expand their after-sales service, to drive away farmers’ concern about quality and service.”
And the third category, the ‘black collar’ class, is an up-and-coming one, says Zhang. “They wear black suits, come and go in black limousines… This emerging class now overshadows the once petty bourgeoisie of the white collar class, represented by employees working for foreign-invested enterprises. The black collar class is a group that effectively controls much of the political, social, and economic resources in China…”
While many high-end, or even middle-class, consumers are as sophisticated as their Western counterparts, most consumers in China, especially rural consumers, are still first-time buyers for a vast variety of consumer goods, informs Zhang. She suggests, therefore, that creating a platform for consumers to experiment with the products or services offered by a firm can be a good start to building the firm’s brand intelligence.
For example, social networking sites may offer opportunities for experiencing new services and products. A success case mentioned in the book is of Coca-Cola’s interactive online platform iCoke, which has attracted more than 15 million Chinese youths ‘looking to share ideas about pop music, entertainment, and online games.’
Another example is IGA or in-game advertising. “Working together with online game companies, advertisers now push their commercial messages, explicitly or implicitly, to game players by allowing them to play games at no cost. This ‘free’ offer is especially targeted at students and low-income consumers.”
An insight of value is tat Chinese consumers can be fiercely loyal to an offering that meets their functional and emotional needs. “Entertainment and nationalism are natural choices for viral elements in China and are often used as focal points in interacting with Chinese consumers.”
One such opportunity in recent times was the Beijing Olympic Games. Those companies that sponsored the games are benefiting enormously within China for delivering their brand intelligence on the Olympic platform, which was a fusion of cultural values and emotional attachment for one billion Chinese, Zhang observes.
An example is of Nike, which could use the opportunity creatively despite a crisis hitting Liu Xiang, a star 110-metre hurdle runner the company was sponsoring. Liu, who had won the gold in Athens, was carrying the hopes of 1.3 billion people to win, again, a gold medal, but he had to drop out of the race because of a serious injury.
“Most Chinese understood and ‘forgave’ him, though disappointment was pervasive. This, in fact, represents some progress in China’s society; in Mao’s era, Liu’s behaviour would have been criticised as a ‘political mistake,’ because athletes were expected to compete for their country even if it meant risking their athletic career or even their life.”
After Liu withdrew from the Games, Nike, together with many other advertisers that had sponsored Liu, did not abandon him, the author narrates. “They sent a very ‘human’ message to Liu’s fans that they would continue to support China’s ‘flying man’ and wished him well for an early recovery. By doing so, Nike and Liu’s other sponsors successfully turned an unexpected – and, seemingly, disastrous – occurrence to their advantage by strengthening their emotional links with Liu’s fans.”
Recommended addition to the progressive marketers’ shelf.
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