From 2000 to 2010, China's economy doubled in size, with consumption increasing from around US$650 billion to almost US$1.4 trillion. Despite China's recent cooling economic growth, depreciating currency and stock market volatility, resilient Chinese consumers are continuing to rock the boat of the global economy. Research conducted by McKinsey & Company study revealed that Chinese urban middle class families are changing the global economy on multiple fronts. So how can marketers better target the world's most lucrative consumers?
Innovate your way to success
As Chinese consumers continue to grow in number and wealth, marketers need to recognise the importance of innovation in setting themselves apart from competitors. Innovation was the hot-topic at the recent Networked Enterprise Institute summit, with Tata Communications’ CEO Vinod Kumar seeing the agility to evolve, collective learning and collaboration as essential characteristics of successful companies.
For example, Wandoujia quickly became China’s leading Android App store by providing a solution to China’s insatiable appetite for streaming media. In addition to offering a cutting-edge multimedia search engine, the platform also enables users to compress and download large media files to their smartphones via wifi or PC-sync – helping them sidestep expensive mobile data fees. Despite thousands of competitors, Wandoujia has attracted over 450 million users, who have downloaded over 1.6 billion apps.
Discretionary Spending on the rise
According to recent McKinsey studies, Chinese consumers have embraced shopping as a form of entertainment for the whole family. And the development of “retail-tainment” is encouraging many consumers to splurge on luxury goods, lifestyle services and novel experiences. Discretionary categories such as clothing, dining and out-of-home cinema experiences grew 13.4% between 2010 and 2020.
In 2014, Chinese model and actress Zhang Xinyu posted a photo with her Bridestowe Bobbie Bear, which resulted in over 65,000 Chinese consumers descending upon a small lavender farm in Tasmania last year in search of a purple bear of their own. After Zhang’s photo went viral, Bridestowe owner Robert Ravens became completely inundated with over 45,000 orders, and had to temporarily suspend online sales before placing a one-per-customer limit on the bears due to voracious demand. Some less-than-scrupulous Chinese consumers even took matters into their own hands, hacking into the farm’s website in an attempt to circumvent the sales limit!
Tapping international e-commerce
China has become the worlds largest e-commerce market, generating more revenue from online sales than the US and Europe combined. And there’s no signs of it slowing down anytime soon. With 46% of Chinese consumers actively purchasing goods online, Kantar Retail estimates the market will reach a whopping 24.2 trillion yuan (US$3.80 trillion) in 2018, making China the global pacesetter in online shopping.
With a world full of international brands available at the click of a mouse, Chinese consumers from even the most remote parts of the country are happily partaking in Haitao (purchasing overseas goods online). Whether it’s avocados from Mexico, bears from Australia or even air from Canada, new technologies like Alipay are helping to streamline payment processes, connecting Chinese buyers with sellers from around the world.
Customise designs for Chinese consumers
Despite the Internet’s global connectivity, language and cultural barriers are still holding back the full purchasing power of the Chinese middle class. Companies offering products and services developed specifically for the Chinese consumer will have a distinct advantage in capturing and growing market share.
Microsoft’s largest Research and Development Centre outside Washington is located in Beijing, with over 3,500 employees focused on tailoring their products and services for the Chinese market. Microsoft’s smartphone is not only adapted for putonghua speakers, but also features a Chinese version of Cortana called “Little Ice”, which responds to verbal questions and commands. Teams are even adapting their Kinect motion sensor to respond to Chinese sign language!
Chinese consumers are now rapidly changing the face of the global economy. Greater affluence, new technologies and the rise of e-commerce markets have lead to competitive challenges on a multinational level. Marketers who learn to fully embrace the unique (and sometimes unpredictable) power of Chinese shoppers will clearly have an advantage in the years to come.