+44(0)7988364785 david.joseph@hubofchina.com

China’s Complex Trading Environment

Recent developments have made the Chinese market of 1.3 billion people increasingly attractive to a wide range of international businesses.  Rapidly changing demographics, rising disposable incomes, increased willingness to spend and a de-regulating open business environment have all contributed. However, China’s historical, political, and cultural context mean that it is a complex trading environment which needs to be understood fully. Understanding the Chinese market cannot be taken for granted.

 

understanding the chinese market

China’s One-Child Policy

China’s one-child policy has led to a generation who are the sole focus of their parents’ interest and aspirations. This was apparent from my first year teaching English in a middle school in Chengdu. The children could not do wrong according to their parents; if children was underachieving it was the result of ‘poor tuition’ rather than their inability to adhere to instructions or lack of endeavour. Children acted with authority, the authority their parents had gifted them from a young age.

In the supermarket a  packet of dried mangoes are placed before a two year old, she looks at them critically and they are hastily returned to the shelves. Her mother moves to dried kiwis; these are approved by her daughter and so thrown into the basket.  Kids have huge decision making power in the family; twenty earlier you were given what you got, but there has been a very substantial power shift. According to the “Marketing implications of China’s ‘little emperors.’” Review of Business it has become common for almost half a family’s income to be spent on the child. Clearly from a marketing point of view it is essential to persuade the child of the merits of a purchase. A focus group could be utilised to understand the opinions and thoughts of the only child.

Having said this, the one child policy has relaxed and more Chinese families are now having two kids. However the mindset of investing so considerably into one’s offspring will not change immediately.

one baby policy

 

A New China Order

For those born in the 80’s and 90’s there are significant differences in wealth, education, relationship and information. China has developed and opened up to the world; this is very different from the experience of those born in the 60’s and 70’s who were raised to believe in revolutionary Maoism.

For generations it was standard procedure for offspring to live with their parents permanently; however the new generation has become individualistic. Traditional Chinese family values discouraged dissent and any challenge to authoritative figures. Independence was not a highly valued trait neither was questioning; however opportunities that arose in the 80’s to work in private enterprises and/or foreign companies at an early age created a new environment. Those who started challenging authoritative figures in a supportive environment began to reap the rewards. This has in turn increased a the younger generation’s confidence. The young are no longer content with taking on entry level menial jobs; they have an expectation of interesting careers with significant financial rewards.

Tremendous Growth Opportunities

The younger generation in China is creating new industries and changing consumers’ buying habits. Western products and services which would previously have not been appreciated in the Chinese Market are being taken more seriously.   This is a market where there is scope for tremendous growth and significant rewards. Clearly understanding the chinese market is paramount for this.