Get to Know the Chinese Consumer — The 7 Things

on November 17 2011 | in Trends | by | with 1 Comment

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As important as it is to understand where the growth potential is in China, it is crucial to know how to capture it. This begins with the Chinese consumer. Here are seven noteworthy findings from the recent McKinsey’s report:

1. Chinese Consumers Are Quick to Adopt the Unfamiliar
“Chinese consumers can be quick to adopt what were once unfamiliar products, opening up whole new areas of growth. For example, 66 percent of consumers in the survey said they bought chocolate this year, compared with 46 percent just two years earlier.”

2. Emotional Considerations for a Product Are Increasing Among Wealthy Consumers
“Emotional considerations, which was barely apparent two years ago, are playing a more important role, particularly among wealthier consumers. In 2009, 8 percent of respondents cited at least one emotional element as playing an important role in their decision to buy chocolate or a mobile phone.”

3. Chinese Consumers Value Brands, But Have Low Brand Loyalty
Consumers value brands largely because they believe that branded products are safer, of higher quality, and more reliable than non-branded ones. About 45 percent of Chinese consumers believe that well-known brands stand for better quality. This compares to 31 and 27 percent in the United States and France, respectively. However, having faith in brands does not always lead to brand loyalty. “In fact, both the number of consumers who always choose from among several brands— refer to as repertoire loyalists—and the number of brands in their repertoire continue to rise. The average Chinese consumer now chooses between three to five brands in any given category compared with two to three brands two years ago. In some categories, such as apparel, where luxury brands have grown hugely popular, the contrast is sharper still.”

4. Wealthier Chinese Consumers Are More Brand Loyal
Brand loyalty rises, especially for more premium products as Chinese consumers’ incomes rise. “The proportion of higher-income consumers who are brand loyal is consistently five percentage points above the proportion in all income groups. This is important because of the speed at which this income group is growing. By 2015, some 35 percent of urban households will have monthly incomes equivalent to RMB 8,500 today, compared with just 8 percent at present.”

5. Confidence in Social Media Is Rising; Credibility of Internet Advertising May Be Declining
Those who find Internet advertisements credible have fallen slightly, but it is the only channel to decline in credibility. Meanwhile, although relatively fewer people use social networks or online forums to share information about products with other consumers—some 20 percent of the Internet population in China use social networks compared with 37 percent in the United States— more of them are gaining confidence in the information posted.

6. Popularity of Shopping as a Past Time May be Waning
“Going shopping with friends and family used to be one of the main forms of entertainment for the Chinese. But though these trips are still valued, their popularity is waning. Some 45 percent of respondents said shopping trips were one of their favorite activities three years ago, but only 36 percent do so today.”

7. Appeal of Internet Shopping is Exploding
The appeal of Internet shopping is exploding. Despite only early 14 percent of respondents shopped on the Internet in the past year, China’s online retail market is already second after the US market, worth around RMB 500 billion in 2010, and McKinsey believe that it could exceed RMB 2 trillion in five years.  “Apparel has the biggest share of online spending, and 64 percent of online shoppers say they bought clothes online in 2011—double the proportion in 2010. Chinese consumers value most about the Internet is the convenience, wide assortment, and price. What concerns them most and deters them from buying more online is the quality of such goods.”

 

image credit: kevin dooley

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One Response to Get to Know the Chinese Consumer — The 7 Things

  1. Marnie says:

    Where is the forward email button?

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