China has become one of the most important economies in the world. Due to the rising incomes disposable and the growing middle-class, Chinese consumers have rapidly changed over the last years.
During the past decades, deep social, economic and cultural changes in China have created a consumer market that is different to any other.
In order to be successful in this market, companies have to understand the needs, requirements and changing characteristics of Chinese consumers. Companies have to provide them quality products and services which meet these needs.
How are these new consumers?
They are price sensitive, but brand conscious. The price is a key factor for Chinese consumers when they make purchase decisions. However, they are also very brand conscious because in their culture, the face and the social status are crucial. Therefore, brands that can signal a higher social and economic status, they will be willing to pay a premium for them.
They are very mistrustful consumers. For example, talking about e-commerce, they don’t trust in sites that ask them to pay first without seeing the product. Because of this lack of trust among Chinese consumers, e-commerce platforms have introduced third-party payment systems such as Alipay. These platforms allow shoppers to pay the money to the third-party account and after they have confirmed the product, the payment systems transfer the money to the seller.
They are more informed, more sophisticated, and more active. They seek information about brands and products via search engines and social media platforms to make informed purchasing decisions. Chinese consumers trust more in comments and opinions that they find on social platforms more than those which are provided by official accounts and adverts. Most of them based their purchasing decisions on those comments.
The desire of foreign products
Chinese consumers are more determined to purchase foreign products and brands. Due to their admiration for the Western style of life and because they believe that Western products have better quality than Chinese products, their interest to purchase foreign items is increasing.
They are buying all kinds of foreign products such as fashion, luxury, food, wine… Related to food, as a consequence of the milk scandal in China, which killed several babies, many Chinese have refused to buy milk products made in China. In addition, their curiosity to try foreign products is driving a huge demand for foreign food and wines by Chinese consumers.
E-commerce has become their main door to purchasing western products.
What do wealthy Chinese consumers want?
Chinese consumers are the biggest buyers of luxury goods and they purchase high-end items as a way to show their economic power. They buy well-known brands such as Dior, Gucci, Montblanc, and Tissot… However, they prefer to purchase these items in their origin countries because the price is up to 40% cheaper than in China and because they believe that it gives them more prestige.
They are more interested to buy Western products and brands because they believe the quality is better and the variety of products and collections is biggest compared to China.
Chinese luxury shoppers are traveling abroad with the main purpose to buy high-end goods due to the higher price of luxury items in China compared to other countries such as South Korea and Japan.
During the last five years, the interest of purchase real estate has grown among Chinese consumers. Nowadays, well-heeled Chinese consumers are buying properties in China and overseas as investments. They spend between $1 million and $3 million, which is a large amount of money. Their favorite foreign countries to buy properties in are the U.S.A., Australia, Germany, France, and Spain.
What do they expect from brands?
Companies should know Chinese culture and history in order to understand Chinese consumers and connect with them. The success or failure of companies will hinge on their understanding of China and its population.
Chinese consumers love brands with a strong story and heritage such as Chanel. Brands that have a fascinating story to tell and are able to meet consumers’ requirements have done a good job.
They want personalized communication with brands. As they are the most connected consumers in the world, they spend a huge amount of time on social media platforms. They want to interact with brands through social networks such as Weibo and WeChat to receive personalized information about news, offers, events, and discounts. Therefore, many brands have created accounts on Chinese social media platforms to reach a huge number of consumers, interact with them and offer them personalized communication with the aim to engage them.
What do they expect about e-commerce?
During 2013, e-commerce transactions accounted for $296.57 billion, representing 41.2% growth compared to 2012. Due to the fast growth, it’s estimated that China’s online retail sales will reach $540 billion by 2015.
Increasingly more, Chinese consumers are willing to purchase products online via e-commerce platforms. E-commerce offers them great convenience and ease to go shopping and therefore, Chinese consumers expect that all brands will incorporate e-commerce services in their business.
They really love the idea of shopping without getting out the bed and receiving their purchases at their own door. In addition, the huge variety of products from everywhere that they can buy via e-commerce sites is one of the main reasons why they are rapidly embracing online shopping.
Chinese consumers have embraced the digital world and they expect companies to do the same. If you are interested to be successful in China you need to develop an online marketing strategy and we can help you. Don’t hesitate to contact us.