I am fascinated by the concept that the Chinese are ‘hourglass’ consumers. They buy products at the top and bottom of the market, but nothing in the middle. It is the buying patterns at the high-end which I find of particular interest. The China middle class are growing!
Certainly I have noticed after several years in China and, when conducting focus groups in particular, that there is a willingness to pay a premium for products/services (especially from the China middle class), and it is in this climate that foreign goods are particularly desirable. Right at the top of the want list are items manufactured in Europe or America.
This was brought home to me only recently when friends I was dining with were unequivocal in ordering the cheapest Chinese dishes available in a restaurant. However, when it came to deciding about the drinks, they were happy to pay a premium rate for Carlsberg, the only British item on the menu. This is not just the desire of the upper class but an ever growing China middle class.
In those born in the 70s or earlier, I have observed a tension between a desire to stand out and a wish to conform; a drive to be ambitious and an acceptance of one’s current lot. There is a conflict between the old ways of Chairman Mau and the new ways as seen on the soaps.
Not so with Generation Y (born in the 80s or later). These youngsters are shrugging off the more traditional views. They are bolder about ostentatious consumerism. They will spend disproportionate sums on global brands. A friend with a monthly salary of £500 a month was delighted to snap-up a bargain designer bag for £2,000. The posters in the Chinese shopping malls display western models wearing American or UK brands. The Western way of life represents achievement and power. This generation embraces both.
Nor is this a culture of modest half-measures. This is not an opportunity for a subtle Nike tick hidden in a pocket. You will see T-shirts emblazoned with large gold Gucci letters; these goods need to be highly visible – if you can pay for it flaunt it.
In the world market it is the Chinese who are the most avid consumers of the top brands. Walk into any London Michael Kors store and you are likely to find Mandarin-speaking assistants selling to the oriental tourists.
These are wealthy consumers who are happy to spend; nonetheless, they are savvy and careful. Unlike previous generations they have access to the internet and are as ready to compare products as their peers in the UK or US citizen.
Huge opportunities for those that get it right
The Chinese market offers huge opportunities. There is an eagerness to buy. But this is not about buying at any price or any product. It needs to be the must-have bag, found in the right location, packaged and sold with meticulous care. The rewards for getting this right are huge.