Inside the mind of the chinese consumer

Inside the mind of the Chinese ConsumerGroup #6

The “idea in brief” vs “idea in practice”

The beliefs western countries hold for China:

1. China as a giant production factory eager with engagedworkers.

2. A monolithic population starving for basic consumer goods.

3.Chinese workers have a lot more disposable income in hand.

4.Chinese lack options in basic household products.

Chinese work ethics & itsmisconceptions.

The primary aim of Chinese workers is to work hard and get rich.

Chinese workers are highly dedicated. Chinese consumers now have lot of money to spend.

The biggest markets amongst Chinese consumers are forbasic household products.

The primary aim of Chinese workers is to work hard and get rich Myth #1

The “Myth”

• Chinese workers adhere to a self-effacing, stereotypically collectivist “Give in service to society” attitude toward work.

• They are worried about the taste (or availability) of the next meal.

1. According to facts only 2% of respondents held that view in 2004 in comparison to 4% back in 1994.

2. Chinese are embracing the entrepreneurial opportunities.

3. The personal goals have shifted towards self-satisfaction and self-expression.

The “Truth”

Whither Personal Ambition

• Aims have become less important• Increasing desire to express their

individuality• Emergence of “Me” generation

Attitude 1994 2004

“Work hard and get rich” 68% 53%

“Don’t think of money; live life that suits my own tastes

10% 26%

“Never think of self, give in service to society”

04% 02%

Chinese workers are highly dedicated Myth #2

The “Myth”• Companies outside China has viewed its workforce as impressively eager.• Workforce is highly dedicated to their employers.• They are engaged in their work.

The “Fact”• Workers feel that their efforts are insufficiently rewarded and recognized.• 68% of employees don’t feel engaged.• Further 20% hate their job to the point of active disengagement.• Larger the organization – Lesser the employees’ personal connection

Consequences ?

Living to Work – Survey 2004

The Management challenge• Lack of focus on Human development may contribute to continuous shortage of

talent.• Management report considers them as automatons.• Any factory experiencing a 22% work hard philosophy must search for more creative

ways to operate.• Larger the organization – Lesser the employees’ personal connection

Opportunities

Evolution

Skill development for Rural workforce

Increasing Western MNCs

China’s entrance in WTO

Chinese consumers now have a lot of money to spendMyth #3

Misconception• All Chinese are benefitting from the rise in China’s average income.• Chinese consumers now have a lot of money to spend.• Image of a growing high potential market

Facts• Though incomes are rising, most Chinese customers remain too poor.• Some Chinese are faring better than others and the better off among them

already own what they want.• Average income rose 30 percent from 1994 to 2004• Only 5 percent say that they are “very satisfied” from their income.• One in five “very dissatisfied” with their current earnings• Only 7 % of the highest earners say they are “very satisfied” with their current

income.

Lessons• Market may not offer as much potential as its size implies• Avoid making investment commitments until solid evidence.• Emphasize repeat and replacement purchases in affluent market• Look more to word-of-mouth than company managed communication to drive

sales

The biggest markets among Chinese consumers are for basic household products.Myth #4

Misconceptions• Chinese consumers demand for merely functional products.• Chinese consumers like to buy basic household products with good

performance reliability only.• Stylish products are just for the higher class.

Facts• Demand for merely functional products have paled.• Consumers now, have a hunger for stylish offerings that suit one’s tastes.• Demand for a colour TV, DVD player and cell phones have increased

exponentially.• High technology products that may not save labour but rather enhance

enjoyment and entertainment are preferred over other products.

The more true scenario of theChinese trend is depicted.

Lessons• Aspirations and desires are outstripping ability.• Traditional bellwethers of modernization don’t necessarily apply.• Chinese consumers want more than just function.• Nokia was successful because it had emphasized fashion over function.• If a company wants to be successful in Chinese markets, it has to pay

attention to physical needs as well as emotional needs too.