A succinct overview of key factors influencing Chinese Consumer behaviour. China truly is a land of opportunity with 30 years of growth that have helped lift millions out of poverty, enriched a middle class that is expanding fast and created 2.7 million millionaires and over 250 billionaires (US$). Given this speed of change and the complexity of a country with a population of 1.35 billion, making sense of the consumer and market context is not just useful, it's vital for success. Even if you're not working directly with China, you may be feeling its growing influence. At Brand Genetics we're constantly working to understand the direction of change in global markets and identify the implications and opportunities for brands. To share some of our learnings the attached Speed Briefing outlines 8 key insights into the fast evolving world of the Chinese consumer.

1. Made in China
8 insights into the Chinese
Consumer and Market

2. Land of Opportunity
China is the world's most populous
country, with over 1.3 billion consumers.
It is forecast to become the world’s second
largest market by 2015 with the purchasing
power to buy 14% of the world’s products.
As companies look to take advantage of this
opportunity there has been an exponential
growth in the Chinese consumer’s choice
of brands & products.
In such a competitive marketplace, with
increasingly savvy & discerning consumers,
it pays to understand the context in which
decisions are made if you want to get
ahead of the pack.

3. 8 insights – with suggested implications - to help
you succeed with the Chinese consumer:

4. 1. No ‘One China’
China is a vast country with significant
regional differences in demographics,
lifestyle, tastes and wealth. Some exceed
the GDP of wealthy Western countries, others
are barely third world. Equally, what works in
one area of China, won’t necessarily work in
another: even in ‘Tier 1’ cities like Beijing and
Shanghai there are as many differences as
similarities.
Equally there is no such thing as the
‘Chinese consumer’ – some are savers,
others spenders; some favour local brands,
others foreign ones. Luckily, the sheer scale of
the market means that targeting a niche in
China is still a huge opportunity.
IMPLICATIONS
China cannot be treated as a
single market – with significant
disparities between regions and
consumers. Brands must focus by
segmenting consumers and
localising their strategy.

5. 2. Constant conflict
between Fitting in
and Standing Out
At the heart of Chinese society is a tension
between fitting in with society and standing out as
an individual. The roots of this conflict lie in
Confucianism, which promoted a society where
the highest virtue was to remain dutiful, but
also believed success could lead to social
acknowledgement.
60 years of communism has also driven a vision
of service to the nation as a key pillar of identity.
But, since the ‘Open Door’ policy, many Chinese
consumers have started to seek the material
satisfaction and personal status many
international brands embody.
IMPLICATIONS
Brands need to understand how
these underlying tensions affect their
positioning, striking a balance
between allowing consumers to
express their individuality while
maintaining their link to society.

6. 3. Aspiring to be
Global, not Western
The Chinese consumer is determined to be part
of the new international order, which is
synonymous with modernity and progress.
However, being global doesn’t mean
sacrificing Chinese heritage and national
pride in favour of Western ways.
There is a strong sentiment of national pride
and the brands that do best in China adapt
to local culture whilst offering ‘global
benefits’: e.g. KFC has outdone McDonalds by
adapting its menus to better suit local tastes;
Lays potato chips have a Pepsi-Chicken
flavoured variant – as Cola chicken is a
common recipe in China.
IMPLICATIONS
Brands should craft their offering
to assimilate with local culture,
creating an offering that is global
– and respectful of China’s rich
culture - rather than remaining
steadfastly foreign.

7. 4. Status Anxiety
Status is key at every level of Chinese society as
consumers seek ways to show they've arrived
or belong to certain groups. As such Chinese
shoppers account for 20% of global sales of
luxury goods and are drawn to visible displays of
status (e.g wearing white Apple headphones
even if they don’t own an iPod) or via gifting.
Even the poorest households (those on less than
$1 a day) spend about 30% of their budgets on
gifts and festivals.
But there are signs the ultrarich are getting
more subtle, avoiding overly logoed items
that are “too flashy” and leaning towards brands
such as Bottega Veneta, whose subtle design
cues send signals to a smaller, select group of
people who are in the know.
IMPLICATIONS
Luxury is an aspiration for
everyone, but status is vital -
brands that demonstrate prestige
can be highly successful but
expect tastes to move away from
excessive ‘bling’ in the future.

8. 5. The growth of
individualistic shoppers
China has the world’s highest personal savings
rates (38% vs. 3.9% for the US) so there are
many careful shoppers who spend time
researching purchases & rarely buy on impulse.
But McKinsey has identified a growing wave of
younger, urban consumers exhibiting more
‘Individualistic’ behaviors. These consumers
want to express their individuality through
their purchases and as such are more self-
indulgent in their choices. As forecasts suggest
there will be nearly 400m of these ‘Individualistic’
consumers in China by 2020 they will be highly
influential trendsetters.
IMPLICATIONS
Whilst a majority remain careful
spenders who need rational
reasons to support purchases,
brands can tap into a growth in
individualistic spending behaviour
– satisfying wants, not just needs.

9. 6. Huge investment
in ‘Little Emperors’
The 34 years since the ‘One Child Policy’ was
introduced have seen many unintended
consequences: one of the lowest population
growth rates in the world, the ‘4-2-1 Problem’
where 1 child must look after 2 parents and 4
grandparents and a ‘shortage’ of girls. But it
also means parents now focus all their effort and
money on their one child.
Parents put huge resources and energy into
the upbringing of their children, often
spending 30% of household income on their
education alone. Equally under such parental
pressure children look for opportunities to
express their own hopes and aspirations, as well
as outlets for rebellion.
IMPLICATIONS
Brands offering real learning for
children will attract parents. But
equally, brands providing
youngsters with a way to express
themselves will appeal too.

10. 7. Power to the
women
Chinese women hold household purse strings,
but they are attractive consumers in their own
right. The one child policy ‘freed’ many women
from ongoing childcare, leading to a much
higher participation in the workforce (68% as
opposed to 58% in the US or 33% in India) and
a much smaller income gap than in many
emerging markets.
Younger Chinese girls also have power –
especially as they are more scarce (119 boys are
born for every 100 girls). Many parents believe
daughters should be raised ‘wealthily’ to
ensure they marry the right sort of man. As
such girls’ desires are pandered to and they enjoy
sharing what they buy both on and offline, using
on social networking sites such as Meilishuo or
Mogujie.
IMPLICATIONS
Chinese women of all ages have
considerable spending power.
Finding ways to appeal to them can
be a route to growth.

11. 8. Connecting
through Social Media
China has the world’s most active social media
population – 95% of Chinese living in Tier 1,
Tier 2, & Tier 3 cities are registered on a social
media site (according to McKinsey). Even rural
areas are seeing a big uptake as cheap
smartphones provide greater access.
On average consumers spend 46 minutes a day
on these sites – with uses changing as they grow
from teenagers, to students to professionals. But
forget Facebook: 80% of consumers research
purchases on local Chinese social media sites
such as Qzone, Weibo, Sina Weibo & RenRen.
Yet only 6% of Western firms have a presence on
these sites.
IMPLICATIONS
Chinese consumers are highly
connected online – often using
social media to research and share
purchases. Creating a strong
presence on the right sites is a
crucial way for brands to engage

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If you're interested in how we can help you build your competitive edge in
China, or other global growth markets, we'd be delighted to talk further
www.brandgenetics.com
Tom Ellis
tom.ellis@brandgenetics.com
+44 (0) 7815 896 098
Andrew Christophers
andrew.christophers@brandgenetics.com
+44 (0) 7967 175 623
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Consultants for their support & collaboration