BIG-China Quarterly Q2 2010 FINAL · Sources: BIGresearch® China Quarterly Survey Q2 2009, Q1 2010, Q2 2010 *Source: “China Leading Index Revised to Show Sma llest Gain in 5 Months.”

BIGresearch® China Quarterly

BIGresearch understands

consumers around the worldconsumers around the world.

The China Quarterly provides insights on over 15,000 Chinese consumers between the ages of 18 d 54 ith i f dl bil 18 34 ld Thi tand 54, with a primary focus on upwardly mobile 18-34 year old consumers. This segment

represents an estimated population of 360 million, with 184 million being men. This group of digitally connected consumers is a large market for luxury brands with a high potential for sales in other

markets. In the 20th series of the China Quarterly, BIGresearch® reveals how the financial outlook, lifestyle, and media consumption of these young Chinese consumers compares to that of American

© 2010, Prosper

y , p y g pconsumers of the same age group.

450 W. Wilson Bridge Road I Suite 370 I Worthington, Ohio I 614.846.0146 I www.bigresearch.com

About the China Quarterly:

• Introduction:– BIGresearch® market intelligence provides unique consumer insights that are gathered online utilizing large sample sizes.

The BIGresearch China Quarterly Surveys monitor the pulse of more than 15,000 Chinese consumers ages 18-54. The surveys are conducted online and they cover purchase behaviors, brand preferences, purchase intentions, media consumption, simultaneous media usage, and media influence on purchases. The data is available with its own Excel based software that allows for unlimited cross-tabs.

• This report is derived from the following BIGresearch® Surveys:– China Quarterly Survey 10: 4th Quarter, 2007 (N=4,336)– China Quarterly Survey 11: 1st Quarter, 2008 (N=4,536)– China Quarterly Survey 12: 2nd Quarter, 2008 (N=4,488)– China Quarterly Survey 13: 3rd Quarter, 2008 (N=4,321)– China Quarterly Survey 14: 4th Quarter, 2008 (N=4,328)– China Quarterly Survey 15: 1st Quarter, 2009 (N=7,326)– China Quarterly Survey 16: 2nd Quarter, 2009 (N=12,056)– China Quarterly Survey 17: 3rd Quarter, 2009 (N=15,168)– China Quarterly Survey 18: 4th Quarter, 2009 (N= 16,582)

China Quarterly Survey 19: 1st Quarter 2010 (N=16 915)– China Quarterly Survey 19: 1st Quarter, 2010 (N=16,915)– China Quarterly Survey 20: 2nd Quarter, 2010 (N=18,089)– U.S. Simultaneous Media Usage Survey®, SIMM® 16: June 2010 (N=23,234)– U.S. Consumer Intentions & Actions® (CIA™) Survey: June, 2010 (N=8,486)

• Cross-tabs utilized in this report (unless otherwise noted):18 34 Chinese Consumers: 18 34 year old respondents to the China Quarterly surveys– 18-34 Chinese Consumers: 18-34 year old respondents to the China Quarterly surveys.

– 18-34 Chinese Males: 18-34 year old male China Quarterly survey respondents.– 18-34 Chinese Females: 18-34 year old female China Quarterly survey respondents.– 35-54 Chinese Consumers: 35-54 year old respondents to the China Quarterly surveys. – 18-34 American Consumers: 18-34 year old American consumers responding to the BIGresearch® CIA and/or SIMM16

surveys.

© 2010, Prosper

y– 18-34 American Males: 18-34 year old American males responding to the BIGresearch® CIA and/or SIMM16 surveys.– 18-34 American Females: 18-34 year old American females responding to the BIGresearch® CIA and/or SIMM16 surveys.

China Quarterly

Consumers are like a puzzle…complex and fragmented… BIG brings the pieces together.Consumers are like a puzzle…complex and fragmented BIG brings the pieces togethercomplex and fragmented… BIG brings the pieces together.

+ =+

© 2010, Prosper

Flash Overview:

• Chinese Consumer Confidence:– Confidence in the economy is flat year-over-year with 6 in 10 being confident or very confident in the chances for a

strong Chinese economy in the next six months. However, confidence is down quarter-over-quarter.• Employment Environment:p y

– In Q2 2010, the Chinese employment outlook declines with more 18-34 year olds expecting more layoffs than at present in the next six months.

• Consumer Finances:– Decreased consumer confidence does not bode well for personal finances as the number of 18-34 Chinese Consumers

indicating they are “better off” financially declines in Q2 2010indicating they are better off financially declines in Q2 2010.• Practicality:

– The number of 18-34 Chinese Consumers indicating they have become more practical and realistic in their purchases over the last 6 months is down both quarter-over-quarter and year-over-year.

• Consumer Packaged Goods:Consumer Packaged Goods:– Walmart and Carrefour continue to dominate the grocery scene as 18-34 Chinese Consumers indicate they shop the

two stores most often. Quarter-over-quarter both Carrefour and Walmart lost consumer share.• Simultaneous Media Usage:

– Being avid users of media, marketers must understand young Chinese Consumers’ media usage habits. 18-34 Chinese C lik l t b i di i lt l d i i th ti iti t th tiConsumers are likely to be using media simultaneously and engaging in other activities at the same time.

• Influence to Purchase:– Media influence is key to increasing advertising ROI in China as the country is one of the world’s largest ad markets and

one of the toughest places for foreign brands to succeed.

© 2010, Prosper

Consumer Confidence:

• Quarter over quarter Chinese consumer confidence is down almost 8% with 61 6% of 18 34 year olds• Quarter-over-quarter, Chinese consumer confidence is down almost 8% with 61.6% of 18-34 year olds indicating they are confident or very confident in the chances for a strong Chinese economy in the next 6 months. Year-over-year, confidence levels remain flat.

– Consumer confidence in China appears to be mirroring reports of an expected slow-down in economic growth. Some analysts feel Chinese economic growth will slow to an 8% pace by the end of 2010, down from the 11.9% annual gain in GDP in the first quarter *quarter.*

• Despite declining confidence, Chinese consumers continue to remain more confident than their 18-34 American counterparts. 39.6% of 18-34 American Consumers are confident/very confident in the U.S. economy.

How confident are you in the chances for a strong Chinese economy in the next

9.3%7.5%

11.5%No confidence

y g y6 months? 18-34 Chinese Consumers

29.3%

46 6%

25.6%

43.2%

26.9%

Confident

Little confidence

17.3%

44.0%

20.2%

46.6%

18.3%Very confident

Confident

© 2010, Prosper

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Q2 2010 Q1 2010 Q2 2009

Sources: BIGresearch® China Quarterly Survey Q2 2009, Q1 2010, Q2 2010*Source: “China Leading Index Revised to Show Smallest Gain in 5 Months.” Bloomberg. 29 June 2010

Stock Market:

• Confidence in the Chinese stock market also declined quarter-over-quarter and year-over-year.• Quarter-over-quarter, the percentage of 18-34 Chinese Consumers who are confident/very

confident in the stock market declined 11.5%. Year-over-year the decline is 3.8%.– Investors are now concerned at the implications of slowing Chinese growth for the global economy. Recent reports on leading

economic indices are showing that growth is not likely to continue to accelerate in China *economic indices are showing that growth is not likely to continue to accelerate in China.*

70.0%

Would you invest in the Chinese Stock Market?18-34 Chinese Consumers

40.0%

50.0%

60.0%

10.0%

20.0%

30.0%

0.0%Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010

Definitely/Probably invest (Confident or Very Confident)

© 2010, Prosper Sources: BIGresearch® China Quarterly Surveys Q2 2008 – Q2 2010

Definitely/Probably Not Invest (Little or No Confidence)I don't invest in the stock market at all

*Source: “China Leading Index Revised to Show Smallest Gain in 5 Months.” Bloomberg. 29 June 2010

Employment Outlook:

• Quarter-over-quarter, the Chinese employment outlook declines with more 18-34 Chinese Consumers (31.2% vs. 24.6% in Q1 2010) anticipating more layoffs over the next six months than at present. However, this quarter’s outlook is more positive compared to Q2 2009 when 32.4% of 18-34 year olds were expecting higher rates of layoffs.

• In the U.S., 22.7% of 18-34 Americans are expecting more layoffs than at present in the next 6 months.

Regarding the Chinese employment environment, over the next six (6) months, do you think there will be more, the same or fewer layoffs than at

t? 18 34 Chi C

60.0%

70.0%present? 18-34 Chinese Consumers

30.0%

40.0%

50.0%

10.0%

20.0%

More Same Fewer

© 2010, ProsperSources: BIGresearch® China Quarterly Surveys Q1 2008 – Q2 2010; BIGresearch® CIA, June 2010

0.0%Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010

Consumer Finances:

• As with confidence in the economy, confidence in personal finances also declines quarter-over-quarter. In Q2 2010, 39.9% of 18-34 Chinese Consumers indicate they are better off financially compared to last year, down from 42.6% in Q1 2010. Year-over-year, however, positive sentiments are up 36.6%.

48 8%52.0% 51.4%

49 2%

60.0%

Regarding your personal finances, compared to this time last year are you... (18-34 Chinese Consumers)

29 2%33.2%

37.3%

42.6%39.9%

48.8% 49.2% 47.6% 46.1% 46.2%

40.0%

50.0%

28.0%26.0%

29.2%

23.2% 22.0%19.4%

17.6%15.2%

11.3%13.9%

20.0%

30.0%

0.0%

10.0%

Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010

© 2010, Prosper Sources: BIGresearch® China Quarterly Surveys Q4 2008 – Q2 2010

Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010Better Off Same Worse Off Worse Off Trend

Consumer Savings:

• Perhaps prompted by more negative feelings toward their personal financial situation, 46.3% of 18-34 Chinese Consumers are planning to save more this year than they did last year.

• In comparison, 46.4% of 18-34 Americans are planning to save more. Chinese consumers are more likely to save less than last year, while American consumers are more unsure, likely a result of the shaky employment and economic environment in the U.S.

46.3% 46.4%45 0%50.0%

Overall, do you plan to save more, the same, or less than you did last year?

34.6% 33.2%

30 0%35.0%40.0%45.0%

13.8%10 6%15.0%

20.0%25.0%30.0%

5.2%

10.6% 9.7%

0.0%5.0%

10.0%

© 2010, Prosper

More Same Less Not Sure18-34 Chinese Consumers 18-34 American Consumers

Sources: BIGresearch® China Quarterly Surveys Q2 2010; BIGresearch® CIA, June 2010

Financial Investments:

• With almost half of young Chinese Consumers planning to save more, it is interesting to take note of how 18-34 Chinese Consumers plan to meet their savings goals.

• When it comes to investments, young Chinese consumers are most likely to have savings accounts (39%), life insurance (27.9%), stocks/options (23.4%) and mutual funds (23.2%).( ), ( ), p ( ) ( )

7.9%Individual Retirement Account (IRA)

Which of the following investments do you currently have?

18-34 Chinese Consumers

39.0%

23.4%4.6%

7.2%

Savings AccountStocks/Options

Foreign CurrencyGold


27.9%

23.2%

6.8%

10.0%

Life InsuranceMutual FundHedge Fund

Treasury Bills

25.9%

7.2%

4.2%

% % % % % % % % % %

None of the aboveCorporate Bonds

Local Government Bills/Notes/Bonds

© 2010, Prosper

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%

Sources: BIGresearch® China Quarterly Survey Q2 2010

Consumer Lifestyle Changes:

• In Q2 2010, practicality in purchasing continues to decline quarter-over-quarter and also declines year-over-year. 58% of 18-34 Chinese Consumers indicate they have become more practical and realistic in their purchases over the last six months. 47.8% of their American counterparts say the same.

• Among 18-34 Chinese Consumers the number of those focusing on needs over wants and sticking to a• Among 18-34 Chinese Consumers, the number of those focusing on needs over wants and sticking to a budget also declines. Focus on being environmentally responsible declines as well, but consciousness of food safety issues rises more than a point quarter over quarter.

In the last si months ha e o made an of the follo ing changes?In the last six months, have you made any of the following changes?

18-34 Chinese Consumers18-34 American

ConsumersQ2 '09 Q1 '10 Q2 '10 June '10

I have become more practical and realistic in my purchases 62.0% 59.4% 58.0% 47.8%I have become more practical and realistic in my purchases 62.0% 59.4% 58.0% 47.8%I have become less practical and more impulsive in my purchases 7.4% 8.6% 9.6% 5.4%I focus more on what I NEED rather than what I WANT 45.1% 41.9% 39.9% 50.9%I have become more conscious about food safety 50.5% 42.2% 43.6% 15.6%I am spending more time and money on decorating my home 11.0% 12.3% 11.8% 5.9%I have become more budget conscious 41.3% 38.4% 35.7% 38.5%I am spending more time with my family 25.4% 27.9% 23.9% 25.1%I have become more environmentally responsible in my daily life 40.9% 35.5% 34.6% 14.7%I am eating home cooked meals more often N/A 25.8% 25.3% 36.5%

© 2010, Prosper

I have not made any changes 6.5% 6.8% 7.3% 13.6%*The sum of the % totals may be greater than 100% because the respondents can select more than one answer.

Sources: BIGresearch® China Quarterly Surveys Q2 2009, Q1 2010 & Q2 2010; BIGresearch® CIA, June 2010

Consumer Spending:

• When it comes to spending on big ticket items, 18-34 Chinese Consumers generally outpace their American counterparts. However, 18-34 American Consumers’ plans to spend on TVs outpace Chinese Consumers of the same age, and 18-34 Americans’ plans to spend on DVD/VCRs are on par with 18-34 Chinese Consumers.

– Chinese Consumers’ consumption of high dollar durables will likely continue to be strong throughout 2010 due to– Chinese Consumers consumption of high dollar durables will likely continue to be strong throughout 2010 due to government stimulus programs that give 10% discounts on items like televisions, computers and washing machines.

18 9% 33.9%Computer

Do you plan to make any of the following major (big dollar) purchases within the next 6 months?

6 1%

6.6%

9.0%

12.5%

18.9%

19.0%10.5%

15.5%

15.7%

Jewelry/WatchHouse

Home AppliancesFurniture

Computer

6 6%

14.6%4.1%

6.2%6.1%

6.6%

13.5%7.8%

8.0%

DVD/VCRTV

Stereo EquipmentMajor Home Repair

y

7 8%

11.1%

14.5%

9.3%6.6%

13.9%

29.4%

30.8%

24.8%

OtherMobile Device

Vacation TravelDigital Camera

© 2010, Prosper

7.8%0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%

18-34 Chinese Consumers 18-34 American Consumers

Sources: BIGresearch® China Quarterly Surveys Q2 2010; BIGresearch® CIA, June 2010

90 Day Outlook:

• The 90 day spending outlook of 18 34 Chinese Consumers continues to outshine the spending outlook• The 90 day spending outlook of 18-34 Chinese Consumers continues to outshine the spending outlook of Americans the same age.

• However, according to the BIGresearch Diffusion Index (those planning to spend less in the next 90 days subtracted from those planning to spend more), the number of 18-34 Chinese Consumers planning to spend less (vs. the same time last year) in key retail categories such as electronics outpaces the number p ( y ) y g pplanning to spend more. Quarter-over-quarter most categories remain flat, while spending intentions for children’s clothing, women’s clothing, toys and linens/bedding/draperies are up.

– Retail sales are projected to remain strong in 2010. The Chinese Ministry of Commerce projected that retail sales will climb by 16% in 2010, a slight increase over the 15.5% of 2009.*

Over the next 90 days do you plan on spending more, the same or less on the following items than you would normally spend at this time of the year? DIFFUSION INDEX


18-34 American Consumers


18-34 American ConsumersConsumers Consumers Consumers Consumers

Category: Q1 '10 Q2 '10 June 2010 Category: Q1 '10 Q2 '10 June 2010Children's clothing 18.8 26.3 -1.2 Toys -14.7 -10.5 -28.2Women's Dress clothing 7.0 7.5 -24.3 Electronics -11.0 -12.3 -24.9Women's Casual clothing 1.1 1.3 -23.9 CDs/DVDs/Videos/Books -9.0 -12.6 -29.9gMen's Dress clothing -6.6 -6.4 -26.6 Groceries -1.9 -1.4 -3.8Men's Casual clothing -1.2 -0.8 -22.1 Home Improvement/ Hardware supplies -19.6 -20.1 -27.1Shoes 6.1 6.1 -15.3 Lawn and garden supplies -26.7 -26.3 -23.0Health and Beauty Aids -0.5 -2.4 -17.7 Home furniture (chair-sofa-bed-etc.) -14.9 -14.4 -22.4Going out to eat 9 3 10 7 34 7 Decorative home furnishings 15 2 15 3 26 7

© 2010, Prosper

Going out to eat -9.3 -10.7 -34.7 Decorative home furnishings -15.2 -15.3 -26.7Sporting goods -23.3 -23.2 -34.5 Linens/Bedding/Draperies -12.4 -10.5 -27.3

Sources: BIGresearch® China Quarterly Surveys Q1 2010 & Q2 2010; BIGresearch® CIA, June 2010*Source: Sagami, Tony. “I’ll Have What They’re Having.” Uncommon Wisdom. 28 April 2010.

Chinese Auto Market:

• In Q2 2010 23% of 18 34 Chinese Consumers indicated they were planning to buy or lease a vehicle in the• In Q2 2010, 23% of 18-34 Chinese Consumers indicated they were planning to buy or lease a vehicle in the next six months, down from 23.4% in Q1 2010 and up 17.1% from Q2 2009.

– Last year government incentives helped China overtake the U.S. as the world’s largest auto market with sales rising nearly 50% to 13.6 million vehicles. However, with recent scale backs in auto-sector stimulus measures, analysts expect sales growth to moderate this year to a more sustainable 10%-15%. With tax incentives expiring, the government is now t i th t t Chi C t d i l di ff i h b idi t id t t btrying other ways to get Chinese Consumers to spend, including offering huge subsidies to encourage residents to buy fuel efficient vehicles.*

• In comparison, 16.3% of 18-34 year old Americans are planning to buy/lease in the next 6 months.

Are you planning on buying/leasing a car/truck within the next 6 months?

60.0%

70.0%

80.0%

y p g y g g18-34 Chinese Consumers

30.0%

40.0%

50.0%

Yes No, I bought/leased within the last six months No

0 0%

10.0%

20.0%

30.0%

© 2010, Prosper Sources: BIGresearch® China Quarterly Surveys Q4 2007 – Q2 2010; BIGresearch® CIA, June 2010

0.0%Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10

*Source: Fung, Esther. “GM Expects Bigger Lift from China.” The Wall Street Journal. 13 April 2010.*Source: Shirouzu, Norihiko. “China’s Car Market Cools.” The Wall Street Journal. 6 July 2010.


• Of the 23% of 18 34 Chinese Consumers who are planning to buy/lease a car or truck in the next 6 months 43 8%• Of the 23% of 18-34 Chinese Consumers who are planning to buy/lease a car or truck in the next 6 months, 43.8% are considering a Chinese brand, while 23.9% are considering a European brand and 21.5% are considering a Japanese brand.

• Of the 13.3% of 18-34 Chinese Consumers who have bought or leased a car or truck in the last 6 months over half (51%) purchased a Chinese brand, while 21.7% purchased a Japanese brand.

– Despite a smaller share of the market, China has given U.S. automakers a much needed sales boost as the country’s auto marketcontinues to grow faster than that in the United States. U.S. automaker GM expects sales of more than two million vehicles for 2010, four years ahead of its original target, and in the first half of 2010 Ford Motor Co. sold over 300,000 vehicles, up 53% because of demand for fuel-efficient cars.*

55%Auto Brands Considered/Purchased – 18-34 Chinese Consumers

43.8%

51.0%

40%

45%

50%

55%

Planning to Buy/Lease In Next 6 Months

Bought/Leased Within Last 6 Months

21.5%23.9%

21.7%20%

25%

30%

35%

2.3%6.8%

1 8%

16.1%

3.7%5.7%

1 7%5%

10%

15%

20%

© 2010, Prosper

2.3% 1.8% 1.7%0%

Chinese Japanese European Korean American Other

Source: BIGresearch® China Quarterly Surveys Q2 2010*Source: Fung, Esther. “GM Expects Bigger Lift from China.” The Wall Street Journal. 13 April 2010. and Shirouzu, Norihiko. “China’s Car Market Cools.” The Wall Street Journal. 6 July 2010.


• Top motivations for purchasing a new vehicle among 18-34 Chinese Consumers who bought or leased in the last six months are wanting better safety features (24.9%), better gas mileage (23.1%), financing deals/incentives being too good to pass up (22.1%) and needing another car for their family (21.6%).

6 2%8.7%

My old car 'died'Needed more room

Which of the following motivated you to get a new vehicle?18-34 Chinese Consumers who Bought/Leased in the Last Six Months

Q2 2010

24 9%

20.1%12.3%

21.6%6.2%

I anted a ehicle ith better safet feat resI like the style of the new models

My significant other wanted a new carNeeded another car for my family

My old car died

16.7%17.1%

23.1%24.9%

I was tired of my old car, I wanted something newI wanted a vehicle with new 'tech toys' (GPS, DVD, etc.)

I wanted a vehicle with better gas mileageI wanted a vehicle with better safety features

22.1%8.2%

14.0%13.1%

Financing deals/incentives were too good to pass upMy lease was up

My old car had high mileageMy old car was always in the repair shop

© 2010, Prosper

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Source: BIGresearch® China Quarterly Survey Q2 2010

Grocery Market Battle:

• Quarter over quarter top grocer Carrefour lost consumer share as 15 3% of 18 34 year olds indicate they• Quarter-over-quarter top grocer Carrefour lost consumer share as 15.3% of 18-34 year olds indicate they shop the retailer most often for groceries in Q2 2010, down from 16.2% in Q1 2010. Other top grocers Walmart, DaRunFa, Hao & Duo Supermarket and Hualian remain relatively flat quarter-over-quarter.

– Year-over-year Carrefour gained consumer share, reflecting the 7.9% increase in first quarter sales at Carrefour’s China stores.*

• Top reasons for shopping a particular store most often include location (61.1%), price (52.1%), selection (44.7%), quality (38.9%) and service (25.2%).

Where do you buy your groceries most often?18-34 Chinese Consumers

15.1% 14.5%16.2%

14.7%15.3%14.4%15%

20%

Q2 2009 Q1 2010 Q2 2010

7.5% 6.9%7.4%6 4%

7.3%6 1%

10%

4.8%6.4%

4.5%6.1%

4.6%

0%

5%

© 2010, Prosper

0%Carrefour Walmart DaRunFa Hao & Duo

SupermarketHualian

Sources: BIGresearch® China Quarterly Surveys Q2 2009, Q1 2010, Q2 2010*Source: Sagami, Tony. “I’ll Have What They’re Having.” Uncommon Wisdom. 28 April 2010.

Mobile Market:

• Although 97.7% of 18-34 Chinese Consumers currently own a cell phone, almost half (46.7%) are planning to buy a new cell phone in the next 90 days.

• Though up slightly year-over-year, the number of consumers planning to buy a new cell phone in the next 90 days has continued to decline quarter-over-quarter.

56.8% 58.8%56.0%

58.7%54 2%60.0%

70.0%Are you planning on buying a new cell phone in the next 90 days?

56 0% 54.2% 51.3% 50.1% 52.5% 53.3%

43.2% 41.2% 44.0% 41.3%45.8%

48.7% 49.9% 47.5% 46.7%

40.0%

50.0%

20.0%

30.0%

0.0%

10.0%

Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10

© 2010, Prosper

Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10

Yes No Yes Trend

Sources: BIGresearch® China Quarterly Surveys Q2 2008 - Q2 2010

Mobile Market:

• Of the 46 7% planning to buy a new cell phone in the next 90 days 8 in 10 are looking for basic features• Of the 46.7% planning to buy a new cell phone in the next 90 days, 8 in 10 are looking for basic features such as caller ID and an address book in their new cell phones.

• The majority (over 3 in 4) are also looking for a calendar, Internet access, blue tooth technology, text messaging, a camera, color screen and a calculator in their new cell phone.

61 1%59.6%

Email accessDownloadable ring tones

What features or attributes do you need in a cell phone?Top 15 Among 18-34 Chinese Consumers Planning to Buy a New Phone

67.8%65.2%

64.1%63.2%

61.1%

Streaming videoCall forwardingSpeaker phone

GamesEmail access

76.7%76.6%

75.6%

75.2%67.8%

Camera-enabledText messaging

Color screenCalculator

Streaming video

81.3%78.0%77.9%

77.4%76.7%

Address bookInternet Access

CalendarBlue tooth

Camera enabled

© 2010, Prosper

82.6%8 3%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0%

Caller ID

Source: BIGresearch® China Quarterly Survey Q2 2010

Online Research:

• 58.6% of 18-34 Chinese Consumers regularly research products online before purchasing them in-store, while another 37.8% occasionally do research online.

• In comparison, 45.2% of 18-34 American Consumers regularly research products online before purchasing them in person.O th l t 90 d 18 34 Chi C h d l l t i li h d• Over the last 90 days 18-34 Chinese Consumers researched apparel, electronics, appliances, shoes and beauty care and cosmetics online before purchasing them in person.

70 0%

How often do you research products online before purchasing them in person or in a store? Top Five Products Researched

Online Before Purchasing In Store

58.6%

45.2% 47.8%50.0%

60.0%

70.0% Online Before Purchasing In Store Over Last 90 Days:


Apparel – 50.7%37.8%

20.0%

30.0%

40.0%Electronics – 34.6%

Appliances – 34.0%

3.6%7.0%

0.0%

10.0%

Regularly Occasionally Never

Shoes – 33.7%

Beauty Care & Cosmetics – 31.7%

© 2010, Prosper


Sources: BIGresearch® China Quarterly Survey Q2 2010; BIGresearch® SIMM16, June 2010

Online Shopping:

• Online shopping is extremely popular in China, with 94.4% of 18-34 Chinese Consumers regularly or occasionally purchasing products online.

• Chinese Females are more likely to regularly purchase products online (54.6%) compared to their male counterparts (47.4%).

I 2009 th l f li h i t d f 2% f t t l d l i 2009 f 1% i 2008 O li– In 2009 the value of online shopping accounted for 2% of total consumer goods sales in 2009, up from 1% in 2008. Online shopping is expected to continue to be a bright spot with that figure expected to double again by the end of this year to reach RMB 500 billion ($73.2 billion).*

60 0%How often do you purchase products online?

50.8%

43.6%47.4% 46.0%

54.6%

41.0%40 0%

50.0%

60.0%

20.0%

30.0%

40.0%

5.6% 6.7% 4.4%

0.0%

10.0%

© 2010, Prosper Source: BIGresearch® China Quarterly Survey Q2 2010

Regularly Occasionally Never18-34 Chinese Consumers 18-34 Chinese Males 18-34 Chinese Females

*Source: Madden, Normandy. “Retail Sales of Consumer Goods Will Top $2.2 Trillion in 2010.” Ad Age China. 9 June 2010.

Online Fun & Entertainment:

• Young Chinese and American Consumers also head to the Internet for fun and entertainment.• Among 18-34 Chinese Consumers, 56.3% regularly IM/Chat online while 45.8% download music/videos,

40.7% read celebrity gossip, 36.7% go shopping and 28.8% search for movie reviews and schedules.• In comparison, 40.6% of 18-34 American Consumers download music/videos, while 39.6% play video games, p , , p y g ,

39.4% go shopping, 38.5% IM or chat and 36.2% use online communities/social networking sites such as Facebook and MySpace.

Which of the following online activities do you REGULARLY do for FUN & ENTERTAINMENT while online?Top Ten Among 18-34 Chinese and American Consumers

18-34 Chinese Consumers 18-34 American ConsumersIM/Chat 56.3% Download Music/Videos 40.6%

D l d M i /Vid 45 8% Vid G 39 6%Download Music/Videos 45.8% Video Games 39.6%

Celebrity Gossip 40.7% Shopping 39.4%

Shopping 36.7% IM/Chat 38.5%

Movie Reviews/Schedules 28.8% Online Communities/Social Networking 36.2%

Online Communities/Social Networking 25.7% Watch TV Shows 33.8%

View Photos from Friends 24.1% Movie Reviews/Schedules 31.8%

Watch TV Shows 23.2% View Photos from Friends 28.4%

Locate Old Friends/Classmates 19.9% Celebrity Gossip 24.4%

© 2010, ProsperSources: BIGresearch® China Quarterly Survey Q2 2010; BIGresearch® SIMM16, June 2010

y p

Horoscopes/Astrology 18.9% Visit Video Sharing Sites 24.0%

Simultaneous Media Usage:

• As in the United States, simultaneous media usage is prevalent in China, making it essential to have a consumer integrated strategy when targeting young Chinese Consumers.

Regular or Occasional Simultaneous Media Usage18-34 Chinese

Consumers18-34 American

ConsumersWhen you listen to the radio, do you simultaneously…R d th ? 65 0% 45 1%Read the newspaper? 65.0% 45.1%Watch TV? 54.2% 44.5%Go online? 66.0% 68.1%Read magazines? 62.0% 48.3%Read the mail? 55 8% 51 8%Read the mail? 55.8% 51.8%Engage in other activities? 62.6% 69.9%When you watch TV, do you simultaneously…Listen to the radio? 43.8% 34.2%Go online? 69.2% 83.1%Read magazines? 60.8% 54.0%Read the newspaper? 61.2% 45.4%Read the mail? 53.3% 60.8%Engage in other activities? 65.0% 74.5%*Q ti k d "Wh [ ] d i lt l " (R l l O i ll N )

© 2010, Prosper

*Question asked as: "When you […], do you simultaneously…" (Regularly, Occasionally, Never)


Word of Mouth:

• Both Chinese and American consumers rely heavily on the opinions of their peers when it comes to making purchasing decisions.

• 96.7% of 18-34 Chinese Consumers regularly or occasionally seek advice from others before purchasing products and services, compared to 90.5% of American Consumers the same age.

• 97.3% of 18-34 Chinese Consumers also give advice to others about the products and services they have purchased, compared to 93.2% of 18-34 American Consumers.

When you purchase products or services do Do you GIVE advice to others about products or

43.1%53.5%

65.3%

50.0%60.0%70.0%

When you purchase products or services, do you SEEK advice from others before buying?

42.5%

54.7%

39.6%

53.6%

40 0%

50.0%

60.0%

Do you GIVE advice to others about products or services you have purchased?

3.3%

25.3%

9.5%10.0%20.0%30.0%40.0%

2.7%6.8%10.0%

20.0%

30.0%

40.0%

0.0%Regularly Occasionally Never


0.0%Regularly Occasionally Never


© 2010, ProsperSources: BIGresearch® China Quarterly Survey Q2 2010; BIGresearch® SIMM16, June 2010

Media Influence:

• Media influence is key to increasing advertising ROI in China as the country is one of the toughest places for foreign brands to succeed. Successful marketers must understand that media influence varies by both the target consumer and the retail category.

– For 18-34 Chinese Consumers, auto purchases are most likely to be influenced by TV broadcasts (28.2%) and reading an article (21 9%) hile a to p rchases among o ng Americans are more infl enced b ord ofreading an article (21.9%), while auto purchases among young Americans are more influenced by word of mouth (30%).

– Grocery purchases among 18-34 Chinese Consumers are influenced by TV broadcasts (27.1%) and word of mouth (26.6%), while coupons (60.7%) and in store promotion (42.8%) influence these purchases among American Consumers.

Top Ten Media Influences on Automobile & Grocery PurchasesAutomobiles Groceries

18-34 Chinese Consumers 18-34 American Consumers 18-34 Chinese Consumers 18-34 American ConsumersTV Broadcast 28 2%Word of Mouth 30 0%TV Broadcast 27 1%Coupons 60 7%TV Broadcast 28.2%Word of Mouth 30.0%TV Broadcast 27.1%Coupons 60.7%Read Article on Product 21.9%TV/Broadcast 21.2%Word of Mouth 26.6%In store Promotion 42.8%Cable 19.0%Cable 19.2%In store promotion 25.6%Word of Mouth 37.5%Word of Mouth 18.9%Read Article 18.0%Coupons 22.9%Direct Mail 27.9%Outdoor Billboards 18.6%Newspaper 17.5%Read Article 15.2%Advertising Inserts 25.6%p p gMagazines 16.1%Magazines 16.1%Cable 14.5%TV/Broadcast 25.6%Advertising Inserts 14.4%Internet Advertising 15.9%Direct Mail 12.5%Newspaper 23.1%Internet Advertising 13.5%Radio 15.1%Advertising Inserts 10.4%Cable 20.5%Blogging 12.6%Outdoor Billboards 14.8%Internet Advertising 10.3%Read Article on Product 18.4%

© 2010, Prosper

In store promotion 12.5%Instore Promotion 12.2%Instant Messaging 10.3%Magazines 17.5%*Question asked as: "For each of the following retail categories, please tell us which of the following media influences your purchases. (Please check all that apply)."


China Market Overview: 18-34 vs. 35-54 year olds

• 61.6% of 18-34 year olds are confident/very confident in the chances for a strong Chinese economy in the next six months, vs. 52.1% of 35-54 year olds.

• 54.1% of 18-34 year olds are confident/very confident in the stock market indicating they would definitely/probably invest vs. 61.9% of 35-54 year olds.

• 31.2% of 18-34 Chinese consumers fear more layoffs than at present over the next 631.2% of 18 34 Chinese consumers fear more layoffs than at present over the next 6 months vs. 33.1% of 35-54 year olds.

• 39.9% of 18-34 year olds indicate they are “better off” this year compared to last year when it comes to their personal finances vs 24 9% of 35-54 year oldsit comes to their personal finances vs. 24.9% of 35-54 year olds.

• 20.1% of 18-34 year olds agree/strongly agree with the statement “I am saving enough to meet my future needs,” vs. 20.3% of 35-54 year olds.

• 58% of 18-34 consumers are being more practical and realistic in their purchases vs. 59.1% of those 35-54.

© 2010, ProsperSource: BIGresearch® China Quarterly Survey Q2 2010

China Market Overview: 18-34 vs. 35-54 year olds

• 23% of 18-34 vs. 25.5% of 35-54 consumers are planning on buying/leasing a car/truck within the next 6 months.

37 6% f Chi i di t l t i t t h b i l thi• 37.6% of young Chinese consumers indicate sales are not important when buying clothing vs. 36.4% of 35-54 year olds.

• 23.2% of 18-34 year olds say the newest trends and styles are important to them when it y y y pcomes to fashion vs. 15.7% of those 35-54.

• 46.7% of 18-34 year olds are planning on buying a new cell phone in the next 90 days, compared to 43 1% of those 35-54compared to 43.1% of those 35 54.

• 14.4% of 18-34 year olds shop at Walmart most often for groceries vs. 12% of 35-54 year olds.

© 2010, ProsperSource: BIGresearch® China Quarterly Survey Q2 2010

About BIGresearch®:

BIGresearch® market intelligence provides unique consumer insights through online surveys. The China Quarterly monitors the purchasing behavior and media consumption of more than 15,000 Chinese consumers ages 18-54, with a primary focus on 18-34 year olds. The recently expanded g , p y y y pChina Quarterly includes more detail and greater insights on shopping habits and media consumption. The China Quarterly is available in report or database format.

The BIGresearch® U.S. studies include the monthly Consumer Intentions and Actions® (CIA™) Survey which monitors the pulse of more than 8 000 consumers The CIA™ delivers freshSurvey which monitors the pulse of more than 8,000 consumers. The CIA™ delivers fresh, demand-based information on where the retail consumer is shopping and their changing behavior. Unlike indicators based on past performance, this data brings intelligence on where the retail consumer is going, their intentions and actions. BIGresearch® also conducts the Simultaneous Media Survey® (SIMM®) which monitors over 15,000 consumers twice a year.

The BIGresearch® methodology provides the most accurate consumer information in the industry. Complimentary findings are available at www.bigresearch.com

Disclaimer of Warranties:BIGresearch® is a registered trademark of Prosper Business Development Corp. Services are delivered by Prosper and/or a Prosper affiliatedcompany (“Prosper”). Prosper makes no warranties, either expressed or implied, concerning: data gathered or obtained from any source; the present

© 2010, Prosper

p y ( p ) p , p p , g g y ; por future methodology employed in producing BIGresearch® statistics; or the BIGresearch® data and estimates represent only the opinion of Prosper and reliance thereon and use thereof shall be at the user’s own risk.

Documents

BIG-China Quarterly Q2 2010 FINAL · Sources: BIGresearch® China Quarterly Survey Q2 2009, Q1 2010, Q2 2010 *Source: “China Leading Index Revised to Show Sma llest Gain in 5 Months.”