1.5 Dialogue with Scholar: Professor Chi-yue Chiu

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Selling to Chinese Consumers

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The Chinese University of Hong Kong

Selling to Chinese Consumers

31 ratings

Course 1 of 4 in the Specialization Doing Business in China

This course is designed to help learners sell their products, goods and services to Chinese consumers. To achieve this goal, the course will use evidence-based research in psychology, economics, legal studies and marketing to help learners understand the historical, economic and legal contexts of doing business in China and the behavioral characteristics of Chinese consumers. The course will cover topics in Chinese and global marketing, Chinese consumers, institutional and cultural influence on consumer motivation and behaviors in Chinese markets, and brand management in China.

From the lesson

The Chinese Consumption Market

China is a big consumption market. It is a distinctive consumption market because of its unique contextual and cultural factors. Why do Chinese consumers spend big money on luxury brands? What roles do historical, contextual and cultural factors play in influencing Chinese consumption habits? The current module seeks to answer these questions.

1.1 The Growth of the Middle Class and of China as a Country6:30

1.2 The Sociological and Economic Characteristics of Chinese Consumers4:25

1.3 An In-Depth Look at Why Chinese Consumers Like Luxury Brands3:51

1.4 The Effects of Lay Elitism on Consumption Choices4:22

1.5 Dialogue with Scholar: Professor Chi-yue Chiu10:53

1.6 The Effects of Agency on Consumption Choices6:23

1.7 Dialogue with Scholar: Professor Krishna Savani10:20

1.8 This Week's Recap1:23

1.9 Dialogue with Practitioner: Susanna Chiu20:19

Meet the Instructors

Prof. Letty Kwan
Assistant Professor
Department of Psychology

Hello, today we have our own

Professor C. Y. Chiu.

He is an expert in culture and he will

tell us more about lay elitism today.

Hello, Professor Chiu, thank you for

coming here today.

Hello! What is lay elitism?

Can you tell us more about this concept?

Lay elitism is a social belief about

how rewards are distributed in a society.

So people holding this belief

tend to believe that all the good things

in life come together with being

in a upper social position.

So if you occupy an upper

social position, then you’d believe that

you would also have friendship, love,

very attractive spouse, reputation,

respects. Basically everything.

I see.

So can you tell us more? How does lay

elitism affect Chinese consumers?

Ah, that is a good question.

Now you know in China

there is not much upward social mobility.

So people tend to stay in the same

social stratum for most of their life;

but, nonetheless, they believe that

if they work hard enough, then they may be

able to move up. Although this may

actually be a collective illusion.

Now in Chinese society, well,

starting from many many years ago in the

Imperial era, people believe that if

they receive good education, they work hard

for the public examination, then they

can climb up the economic ladder and

then become an elite. And so if they

become an elite, they believe that they

can have everything good in their life.

So that give them a very strong achievement

motivation. They aspire to become an elite

in the society. If you look at it

from this angle, you can actually see

that in Chinese consumer market, there's

actually a big market for those

consumer who want to acquire this upper

social position. So if you looked at,

for example, how Chinese people

spend their money

compared to consumer in other countries,

you will find out that they are more willing

to spend money in education. They spend

more money on communication, including

tele-communication and other kind of

like Internet communication. Now in fact

they spend compared to other countries

they spend less money on other consumption

commodities. The reason for that is because

they see consumption to be

a means to an end. So by investing

in education, by investing in communication

they feel that they will allow them to

really climb up the economic ladder.

So that is one effect of this lay elitism

on their consumption pattern. Now of course

for a lot of Chinese consumer they because

they subscribe to this belief so strongly

even though they feel that they themselves

may not have the opportunity to climb up

the economic ladder in their lifetime,

they still hope that their children would

have this opportunity to climb up the

economic ladder. So as a result, they also

spend more on education

of their children and on a lot of

commodity that would enhance

their children's chance of success in life.

So that would be another indication of

the effect of lay elitism in Chinese,

in Chinese society. Now, but of course, for

individuals, when they consume something,

when they decide to buy something, they

may also be affected by this lay belief

and hope that through consumption

they can project an image of themselves

to the people, to the social circle.

So they want to project an image that,

well, if they are already an elite,

they are already in that social class;

if they are not yet a social elite,

then they have this aspiration to become

one in the future.

So that means to them,

ok, buying something is not just

for the utility of consuming that

commodity or that service.

Buying something is about

projecting a self-image that is

consistent with their belief. So, that

means they're willing to spend more

money on products that would

help them to project this image.

For example, they would like to buy

products that they think are consumed by

upper social class people, by

people who have like achievement in the

society. And so there could be a lot of

implications due to this kind of, like,

effects. So, for example, they would like

to make sure that very clear expression

of the elitist status in the goods and

the services they consume. For example,

the logo of the luxury brand

have to be very visible to other people

because they help them project this image.

Now, um, there could be many other

implications as well, but I think, well,

I would stop here and then see what

your reactions are.

So what are some circumstances that

Chinese consumers will buy luxury products

and what are some circumstances that

they will prefer something that

they personally like?

Ah, that is a very good question.

Well, um, not much research has been done

in this area but what we know is that

well, you really want to project

an image of yourself that is

consistent with your belief.

Well, you would buy something

that would be consumed in public.

So, e.g., if I go to buy some undergarments,

okay, I may not be very concerned about

whether or not the undergarments

can project my self-image because nobody

can see it, right?

So there are some products that tend to be

consumed in private settings like

toothpaste, like toilet paper, ok.

And when you buy those stuff,

you probably may not be very careful

or very concerned about expressing

your lay belief about elitism.

But when you buy products that would allow

you to project your image publicly,

then you're more concerned about it.

So, it is very common to see

in Chinese market that the same consumer

will be spending a lot of money on

luxury brand products. At the same time,

they are very calculated and economical

when they consume paper goods from the

supermarket. So I think this is a very

interesting consumer phenomenon in China.

So, if to wrap up the discussion

perhaps, I will ask you one last question.

So can you tell us a specific example

for marketers that they want to sell to

Chinese consumers, so what can they do

given that they know about the

lay elitism concept?

Okay, now that is again a very good

question. Now of course the first thing

that marketers would want to know

is how widely shared this belief is

in the target market.

Okay, so there are some

psychographic studies

that are what business can do

to assess to what extent

this lay belief is widely shared in the

target market. So it could be the case

that in some target markets this belief

is very widely shared, very popular;

but in other markets this belief is not

that widely shared. To give you one

example, if you go to one of those

coastal cities like Shanghai, Beijing

and while there are lots of migrants from

other parts of China who go to

those cities to search for opportunities.

Okay. You could imagine that these

people are very driven by

the potential to become a successful

elite in the society.

And this belief may be particularly strong

in that sense. So knowing your consumer

I think is the first step. Now once

you can identify a market segment

in which this lay belief is very popular,

is very widely shared by the people there,

the next step is to think about how

you can make sure that the product,

the brand that you sell in the market

is associated with this elitism.

To what extent the symbolism of elitism

is clearly expressed by the product itself

and the services you market.

Okay if this is highly visible, well

that would have strong appeal to the

believer in lay elitism. Ok now how can

there are other things that you can do,

for example, okay,

now create a brand name

that signal elitism.

So, for example,

if you are going to open

a new hotel in a city,

make sure that this hotel

has the name that is associated with

being an elite.

So, for example, well,

this is a Grand Hotel,

this is the Royal Plaza.

So these are like names that are

associated with elitism. So so

other names, ok, that sounds equally good

but do not convey this kind of

symbolism may not appeal

to believers in lay elitism.

When you choose an endorser

for your product, you can also

think about who would be

the more appropriate endorser

for the product.

Are they going to be some

celebrities popular among the

younger generation or do you

prefer to have an endorser who is a

recognized success symbol in the community.

So these are some of the things

that you can think about

when you try to target this group of

consumers who're highly achievement driven.

Although in reality, well, we all know that

in China upward mobility is very limited.

But nonetheless, ok, if the consumer

believe in this dream,

okay in the dream that they

can move upward, then they will be

motivated by that belief

to do something that may not be entirely

rational; but to them is something that

we give them hopes for the future.

Not the future of themselves only,

but the future of the next generation.

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