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.
1.5 Dialogue with Scholar: Professor Chi-yue Chiu
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From the course by The Chinese University of Hong Kong
Selling to Chinese Consumers
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The Chinese University of Hong Kong
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Course 1 of 4 in the Specialization Doing Business 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.
Meet the Instructors
Prof. Letty KwanAssistant 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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