Chinese Shoppers versus those in the West
Anyone looking for a view into how Chinese consumers differ from those in the West, should pop down to one of Ikea's 12 stores in China on an idle Saturday afternoon. Shoppers in China's Ikea mega stores provide a glimpse into the modern Chinese consumer: the parade of smartphone-snapping window shoppers; the young, cashed-up couples meticulously studying product details; the masses sprawled over furniture, from lovers cuddling on a couch watching iPad movies, to grandparents, parents and child sipping from flasks of tea and eating pork buns around the dinner table, to those deep in the land of nod on a queen size bed, just there for the whole experience.
Ikea's problem hasn't been getting consumers through its doors - 15 million went through last year, it's getting them to open their wallets rather than napping and socialising. Like most successful Western businesses in China, Ikea has worked hard to retain its Western-ness, while localising those aspects that just don't cut it with Chinese consumers. Ikea has become a different place to what it was when it entered China 15-years ago. To compete with the imitators, Ikea has had to lower its prices. To appeal to a middle class who often don't own cars and shy away from DIY, it offers a good delivery service and great installation packages. Products have been localised, from furniture to the dishes in the cafeteria. To woo shoppers away from the Internet and the array of other bright lights in China's big cities, Ikea has had to provide a whole shopping experience, partially by accident, but it appears to be working. That localisation, coupled with the necessary patience, and an increasing trend of Chinese consumers spending more on products that improve their life experiences, rather than just their outward image in public, has seen sales revenue in China grow to around a billion dollars last year, on top of growth of Ikea's property values.
Chinese consumer differences span far beyond those buying furniture in mega stores. Wine drinkers are more adventurous and eager to learn than in the USA. Restaurant dishes are shaped by Weibo and WeChat feedback. The rules around mobile usage, online shopping and social media are notably different from in the West and even Hong Kong. And in Mainland China, those rules can be quite dissimilar based on geography and demographics. Recognising and understanding those distinctions is one of the keys to succeeding here.
There'll be no Weekly Skinny next week due to the national holiday, with the next issue in your box on October 9. Hopefully there's enough news and views about China in this week's Skinny to get you through until then.
Here are this week's news and highlights for China:
Chinese Consumers
Ikea at Last Cracks China Market, but Success has Meant Adapting to Local Ways: The young boy peeing over an IKEA mattress is an example of how Chinese shopping habits can be quite different to the West. But tolerating it and a localisation of strategy and pricing appears to be paying off for IKEA, whose 2012 Mainland revenue exceeded ¥6 billion ($1 billion), and expansion has seen them become the largest foreign land owner in China.
Chinese Premier Says Foreign Companies To Get 'Equal Treatment': "China will continue to encourage foreign companies to invest and do business in China, and ensure that all companies have equal access ... and equal treatment," Chinese Premier Li Keqiang.
China's Global Firms Face 'Trust Gap': China's multinational brands may be trusted by 84% of Chinese consumers, but just 50% trust them in other emerging markets, and 24% in developed countries.
Internet, eCommerce, Mobile & Social Media
E-Commerce Trends In China: 45% of China's online shoppers go to physical stores to check out the product. When comparing products, 75% compare price. 48% of men and 58% of women place the most importance on comments by other shoppers.
Alibaba Braces for Mobile Revolution: Alibaba has spent $1 billion over the past few months on mapping, social media and operating systems to lure smartphone users to its marketplaces. 7% of Taobao and Tmall transactions were made from a mobile last year.
Chinese Consumers are Angry that the iPhone 5C isn’t ‘Cheap’, but that’s Good for Apple: As Apple retains its premium price points, Chinese consumers lash out at the lack of a cheap iPhone, and compare the 5C colours to Crocs shoes.
Suning Clicks On the Future of Retailing: 1,500 store-strong retailer Sunning is jumping on the eCommerce wagon. Hopefully it can put it's army of 100,000 workers to good use online as well?
Qihoo 360 Secure Browser: Qihoo's 360 security browser is now the most used in China, with 332 million active users a month, or 24.21% of the market.
China Unblocks Twitter in Shanghai Trade Zone: Word on the street is Twitter and Facebook could be unblocked in the Mainland for the first time since 2009. Unfortunately it will just be in Shanghai's Free Trade Zone, but a step in the right direction, and imperative if China genuinely wants to create businesses that market internationally. Will the three-year jail term apply for tweeting rumours?
Food and Beverage
Nestle Says Chinese Consumption May Show 2H Recovery: “If you combine wage increases and urbanization, for food manufacturing companies [China's] still an amazing opportunity,” says Nestle, expecting Chinese consumption to grow further in H2.
Chinese Food Companies Looking Overseas for Acquisitions: 80% of Chinese consumers are spending more on food, with a third buying more higher-end brands.
Half of China's Antibiotics Now Go to Livestock: The per-capita antibiotic usage in China is ten times higher than in the USA and half it goes into livestock. Also disturbing is the 70% of inpatients in China receiving antibiotics.
‘Mr Sirloin’ Raises Stakes at Restaurants: A successful Beijing steakhouse attributes its success to basing new dishes on customer feedback from Weibo and WeChat.
China Wine Q&A: Wine Enthusiast Magazine Executive Editor Susan Kostrzewa: Chinese wine consumers are adventurous and knowledgeable, more open to new varieties and styles than most American consumers are, and they're serious about learning more about wine according to U.S.-based magazine Wine Enthusiast.
Zhengzhou Man Steals Pet Cats, Sells Them to Restaurants as Mutton: A man in China has been stealing his neighbours' cats, soaking them in lamb urine, adding a touch of oil and then selling them to local restaurants as mutton.
Sports
NBA Plans to Expand Streaming of Games in China, Silver Says: NBA has upped its streaming to >a game a day on Weibo. NBA and its players are followed by 60 million fans on Weibo.
Entertainment
How China's Homegrown Biz Is Threatening Hollywood's Payday: China's Tier 3 & 4 cities account for 34% of China's box office, and are expected to be 42% by 2015.
Property & Investments
Chinese Buy Sydney Homes at Unprecedented Rate: As much as 80% of homes in parts of Sydney are being bought by Chinese buyers.
Beauty
China: This Week In Digital Luxury Marketing: Clinique on Taobao are asking consumers who think they bought fake moisturising lotion to submit a photo and reasons for the doubt. 30 submitters receive a free authentic bottle of the lotion.
Fashion
Chinese Supermodel Makes Forbes List: Liu Wen became the fifth highest-earning model in the world last year, earning $4.3 million.
Luxury Goods
Luxury Brands in China Focus on Credentials: Increasingly discerning Chinese consumers crave authenticity, right down to the type of materials. The quality of the product is as important as the strength of the brand for buyers.
The Chinese-Made Luxury Watch Market: Chinese consumers buy luxury watches for two reasons: 1) the Brand - from sales, service and advertisements; and 2) they like the watch design to express their tastes and uniqueness. Chinese made watches are increasing appealing to the second group.
That's The Skinny for the week! China Skinny would love to discuss how we could help with your marketing, online initiatives or research to take advantage of China's opportunities. Just email us at info@chinaskinny.com or call us at +86 21 3221 0273 so we can learn more about your objectives and let you know how we can help.If you've missed earlier news or need to learn more, there's a library of information about Chinese consumers in prior China Skinny Weekly's right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed. If you have any feedback or suggestions for future articles, please let us know.
