0:01
Brands that present a big logo and have
exaggerated patterns are often best-sellers
in China. Such brand examples include
Louis Vuitton, Chanel, Gucci, MCM,
and in the entry luxury market, Coach.
0:17
This is contemporary China, the place
where all global luxury brands
with their flashy logos are coming in for
a gold rush opportunity in its big market.
0:32
I am Letty Kwan, a professor at
The Chinese University of Hong Kong.
I am the instructor for this course,
“Selling to Chinese Consumers”.
In this and the coming 3 weeks,
I will be here to discuss with you
how to sell to Chinese consumers
using strategies that are grounded
in rigorous scientific research.
In this course, you will learn from
research demonstrations, as well as
interviews with renowned scientists, the
behavioral characteristics of
Chinese consumers. Every week also
contains a segment called
“Dialogue with Practitioner”,
1:04
which will help you connect
the concepts and theories
you will learn in this course
to the actual marketing practices.
Hopefully, after the four weeks,
you will have a good understanding
of the current China market, and gain
some insights on how to brand and sell
your products to Chinese consumers.
1:24
Over the past decade, there has been
an exponential growth in China’s GDP
per capita. Within the last
decade, China’s GDP per capita has jumped
from approximately 2000 US Dollar
to a whooping 8000 US Dollar.
That is a 280% increase in
just 10 years.
2:00
America has experienced a similar
consumption boom, but the China
experience is unique in many respects.
Understanding the distinctive cultural
factors that contribute to China’s
extraordinary growth will make
your learning journey worthwhile.
Here are some characteristics of Chinese
consumers, characteristics that have
enormous influence on how they make
consumption choices, and characteristics
that are shaped by Chinese culture.
First, economists generally assume that
consumers’ preferences determine
their choices. Thus, to prefer
what consumer will buy,
we need to know what they like first.
But Chinese consumers’ spending habits
are different. Research has shown that
they do not always buy what they like.
Instead, other factors, like the
anticipated public reactions to one’s own
choices and other normative factors,
may importantly shape what Chinese
consumers want. For example,
Chinese consumers may buy things that
they think others would like them to buy.
3:13
How may consumption trends be related to
the growth of middle class in China?
It is projected that there will be
5 billion middle class globally by 2030,
3:29
McKinsey projected that by the year
of 2022, 76% of urban Chinese households
will be in the middle class.
This will also be a drastic growth of
upper middle class from the year of 2012
to the year of 2022.
The percentage of upper-middle class
will expand from a 14% of
the total urban population in 2012
to 54% in 2022.
This drastic expansion of the upper-middle
class is expected to contribute to the
overall boost in urban private consumption.
As we can see in this diagram, the amount
of consumption will double within a decade.
4:08
This demographic change will be accompanied
by a shift in the consumption habit
in China, because upper middle class
are expected to have different consumption
habits than lower class consumers.
E.g., they tend to spend money on
luxury goods consumption.
The consumption patterns of different
cities will also change, together with the
growth of the middle class in Tier 2 and
Tier 3 cities. These changes will
present new challenges and opportunities
to businesses that intend to sell their
products and services to Chinese consumers.
It is reasonable to believe that most
consumers will buy within their means.
However, consultancy firm IDEO found that
migrant workers who earn an average of
600 USD per month are willing to spend
more than their one month’s salary on an
iPhone. Many Chinese consumers
are obsessed with brand names;
and they are more likely to buy things with
highly visible brand logos so that others
will recognize and notice the brands that
they use. Chinese consumers are also known
to be lower in brand loyalty
and are more willing to try out new brands.
Why are Chinese consumers so
brand conscious? Why do they prefer to
spend on products of famous brands?
5:23
Why do they switch brands so often?
In today’s lesson, you will find
some answers to the above questions.
The lesson consists of three parts.
First, you will learn about some
characteristic motivations of Chinese
consumers, and the influence on
consumption, particularly the consumption
of luxury goods.
Specifically, the Chinese are known for
their high achievement motivation.
5:48
You will learn how the strong drive to
become an elite in the society influences
Chinese people’s consumption habits.
In the second part of the lesson, you will
learn how social norms affect Chinese
consumers’ choices, and understand from a
normative perspective why Chinese consumers
do not always buy what they like.
In both Part 1 and Part 2, you will watch
interviews with expert researchers in
consumer psychology, who will share with
you how their research findings shed light
on the characteristic motivations on
Chinese consumers. In Part 3, you will
see a “Dialogue with Practitioner”, where
you can connect the concepts you learn,
to actual marketing practices.
Prof. Letty KwanAssistant Professor
