1.9 Dialogue with Practitioner: Susanna Chiu

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En provenance du cours de The Chinese University of Hong Kong

Selling to Chinese Consumers

28 notes

The Chinese University of Hong Kong

Selling to Chinese Consumers

28 notes

Cours 1 sur 4 dans 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.

À partir de la leçon

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

Rencontrer les enseignants

Prof. Letty Kwan
Assistant Professor
Department of Psychology

Hello! Susanna, thank you for being here with us today.

So in our lecture, I have mentioned

something about Chinese consumption experience.

I hope you can share your experience with us today.

So I'm going to start off with asking you a few questions.

So in our lecture, we mentioned China

consumers their preferences and the choices

are usually not very consistent.

They sometimes choose something that

they might not actually prefer,

do you observe that with Chinese consumers?

This is interesting since you are in the lecture because I studied economics

when I was in University and one of my favorite theories

‘reveal preference’ means you you reveal your preference in your actions.

So the normal thing, you rightly say so,

you normally reveal your preference in your choice;

but then I think the choice also talking about the utility curve.

Each one has different utility and hence,

you know, I think the utility affected us for many things.

One is you you genuinely wanted to buy it

or take, consume that particular product.

But it also be affected by many many

factors, for example, the peer pressure.

Everyone likes that particular black sports car and you like the white one

and because you feel pressurized because it seems very trendy to buy that,

so you you actually got no choice.

So, you know, it really depends on individual utility.

And for consumption in China is especially is a very complex topic

because it's a really huge market

and in fact every consumer in different province

or even different city, it will be different.

For example, the consumers in Shanghai,

their choice is different from the consumers in Guangzhou

and they will be different from Heilongjiang.

So they're very diversity; it’s a big diverse sector.

And in fact I think this also make it very interesting

to explore the consumption in China.

And hence, like for example, I give you example is like -

I recently we have some friends like doing some property sale.

They have some really nice property in Australia - in Brisbane Gold Coast.

So, you know, we thought that really great, Brisbane Gold Coast, good value.

But it's … to Hong Kong when they're doing this sale in Hong Kong,

it's really popular. But then because

everyone knows Gold Coast and knows its lifestyle.

But then when they’re actually doing it in China,

so it's a bit less of that because everyone say, 'Oh. I want Sydney. I want Melbourne.'

And then if you go further north in China,

even less [sic] remote because they view that it's more importantly it’s a big city.

So when so it’s really big diverse public.

We have to see where we're talking about that particular location.

Alright. So, as you mentioned, because China is so big

and the diversity makes it even harder for for the choices to be predicted.

So do you think that in China as a marketer,

do you think that is extremely difficult?

So if there's no way to predict how the consumers will act,

what kind of suggestions will you make for people doing business in China

or selling to Chinese consumers?

Because sometimes it's so difficult to predict their choice.

It is. But I think the number rules in sales.

I think it always applies.

It’s a golden rule is ‘know your customer’ and this is really important.

This depends on which market you want to sell in and

and then when you target the market, the customer needs,

then you actually search for the product

and also search for the way that you promote.

For example, if you want to sell to,

now obviously the the one of the biggest hit range is 25-35, the below 35,

the young, you know, energetic, want to consume.

And you want to sell to that particular class or later on the middle class.

And those particular, you need to know

where they normally access their buying information.

Of course, those sector at this moment because it might change next year or

the year after, they are they really like to search online.

So when you do a search online,

then you have to think of ways that how to appeal online.

And also this sector, they actually obviously like brand, like luxury,

but they may not pay that much.

So what we say this particular sector

or they probably will be the affordable luxury.

That's the term, the new term in China - ‘affordable luxury’.

They want luxury but they want, they willing to pay, but not like that much.

Obviously, at the other extreme is that

they will pay for the very high-end luxury

and that's where they will shop overseas

for the really the big brand and then they

also will pay more for this brand item rather than non-brand.

And and and that's why in China now, you you have to really know the customers,

which market you want to sell for, and then how to position your product,

and then think of the marketing plan.

And I don't think there’s a formula fits all.

And it’s more importantly who you want to target.

I see. So you mentioned a lot of information in here,

for example, the booming of the affordable luxury market.

So that's something quite new and different

comparatively to what they're doing maybe in Europe or in the US.

And we can see from our lectures also

that these marketers are using very different strategies

to target China consumers versus what they will be doing already outside of China.

Can you give us maybe one or two examples,

how maybe in China or maybe outside of China it is successful,

but perhaps in China it wouldn't be? So there's some cases to identify

some of the difference between the China consumers and consumers outside of China?

Em. I think like if we in China,

I think the affordable luxury when I mentioned that …

that also I want to mention another term is ‘brand and label’.

You know this is … because we have we have brand <i>‘bun pai’</i> [品牌 brand in Cantonese]

and then we have label, I don't know how they can properly convert into Cantonese.

And for brands, they actually have a need a lot of time to cultivate,

you know, culture, the brand, cultivate the brand and then the brand DNA.

So, it’s a long time to produce that brand, and then you market that brand.

And hence that's why, you know, there's a lot of big brands

and be pursued by world-wide consumers because they have the history,

then the heritage and they have the proper DNA.

They represent certain thing. When you wear particular brand,

you represent certain DNA, certain characters.

And then in China, then this is one sector. I think it's still there.

And then the other sector is the label.

The label is the one that they will produce it for particular sector,

maybe for a particular period of time, or particular sector

and those may not last that long, you know, some of the labels.

And because they they want, like I mentioned they they want certain things

probably functional. For example, this is very popular in cosmetic.

Apart from buying the brand cosmetic,

they have really, you know, very nicely designed cosmetic

but they are lower price and they produce a label there – a private label.

For example, next time we can do

a private label of CU, you know, CU Club or CU Culture,

for example, we got a CU Culture brand … label.

And then this CU Culture label, you can produce it

for certain sector, for a particular period of time.

And and there you then you can attract the consumers to buy it

and obviously this label if they're successful

running for some time then they become brand.

And certain label have successfully become brand;

but certain label maybe just for a period of time.

And especially in China they have, especially selling on Internet,

they have got <i>'bau foon'</i> [爆款 hot style in Cantonese], you know,

they just come up for a certain period of time

and selling millions and then then they will switch

to another type of products, different style.

So, they were like following the consumers’ needs

and they only want certain things at certain time.

So this one had, I think in China this is very special,

is that a very quick cycle of product development

and also a very quick cycle of products coming out.

I know in US, in Europe, they also following that trend

but in China especially prominent.

And you can see one week they have many SKU coming out

and then people will buy, then the next week they may not,

they’re running another type of style coming out.

So, they want the consumer to go to to keep continue to purchase.

But obviously for those type of label, their price cannot be too high;

otherwise, you know, they were just have to

think many … think twice before they buy it.

So, they have to be affordable and then they just buy it

and then they ‘Oh! This is nice’, then they buy it again next time.

So you can see this is a very interesting era

for China which I believe US and Europe are also following suit.

Yeah. I think you mentioned something very interesting

and something that we have also mentioned in another lecture.

So this strategy typically perhaps it also

reflects the relationship built between

the brand and the consumers because

as you mentioned they might not have

brands needs a long time to build

but a label may not need such a long time to develop.

So does it relate to the trust issues with the consumers and the companies

or are companies not willing to invest as much

to build the relationship with consumers in China?

Do you think that is the case? That's why they have this quick cycle?

Oh, many factors because one thing is for the brand themselves

if they want to produce a long-lasting brand, it’s a lot of investment.

Actually, it’s a huge investment. A lot of people, you know, think that

I just call a brand called 'Peter Mary' and then it will sell.

It doesn't go like that.

It actually cultivates about the DNA, the lifestyle,

what is the meaning behind that brand.

So that people when they wear it, when they carry a handbag

or wearing a particular apparel,

people know that you represent a particular lifestyle.

So that takes time to cultivate.

But this investment, you know, it may not be always afford by any company.

So, and also and for that and also the product will be quite expensive as well,

relatively, I think relatively higher price.

So there’re a lot of people will … but consumers not all of them are so loyal.

Now one thing is now in in China, there are not many loyal consumers in general.

They will switch quickly and to find another product

that fulfil their needs and switch quickly.

And this switching, there's a lot of factors affecting the switching.

A lot of them are by the mass media, social media, you know,

how they project that image and they will switch

and then today, for example, they would do something really trendy

for a particular sector, then they would switch.

So so what I was talking to some… my friends or business associates

in consuming items, they say the difficulty they find is the loyalty.

Customer loyalty in China - they are not that prominent compared to US or Europe.

So that's why the switching is happening very fast.

Yes, we also observed that in in our data

and also mentioned in one of our lecture

the same trend that you just mentioned.

So you mentioned about brand, labels and affordable luxury.

In this particular lecture, we also saw

that Chinese consumers are particularly

liking luxury brands, especially those with big logos.

Do you think this is particularly for Chinese consumers only,

or is it why why are they doing that? And what are the reasons behind?

Well, I think it's more to go with the social economic as well

because we can see via the brand.

We find that in China you need to... for the brand item,

you need to have logo pretty prominent,

obviously not as before so, but it needs to be prominent

because they need people to know that I've spent quite a bit, you know,

to buy this product representing a particular social status.

Whereas in US, Europe, you need to be subtle.

And you can see that they don't have the big brand here but it’s subtle, you know,

you wear it. And then you can see their advertisement is different.

It's really interesting when you compare the advertisement of both.

So so you you see is a different type of social behavior,

but it's also do with education, so the mass public need to be educated.

And … just now you mentioned brand and I think brand normally were educating

the consumer for over a longer period, and even from young.

Some of them starting from young, you know,

nurturing them especially particular in a very known brand of drinks.

They would start nurturing the the younger children.

Then when they are young, they know about the brand. They may not consume it

because, you know, children they may not consume it.

But when they growing up then they start consuming the brands.

So it’s like become part of their lifestyle, the DNA there.

And that's why it’s a long period of investment.

And in China this moment a lot of investment are relatively short-term

and hence that’s the reason why they may not

you cannot see so many brands coming out from China market.

But it's happening, it's happening, but it takes some time.

So during this transition period, you see some brands are emerging

but takes time and then whilst to fulfil the the market

you have coming out of these different labels

and then to fulfil the customer needs.

Customers really want this particular product but it is not affordable,

so but you come up with replacement products

provided the social marketing has done in a proper way,

they feel that even if I use this not a brand item

but I still can represent my status.

They do still consume and it's a much lesser price, yeah yeah.

That’s interesting.

Yeah, hence the other one is the discount model is also very popular.

You know, for now they have many of these different outlets.

As you see in China, there is the outlet like those warehouse model

or for the pre-season [sic], not this particular season,

the season one or two or, you know, further season earlier and

and you have a lower price to buy brand items and those are very popular.

And and the outlets are I know everywhere in China

and there's a certain like, you know,

a few major ones and they're very profitable.

And and also this is also a good way for people to clear the inventory.

You know sometimes your inventory you have overstocking

and then you're not selling at that particular season,

at least you have a outlet to help you to clear the inventory.

So, this clearing inventory offline, you know, in outlet

or in discount store as well as online and it becomes quite popular

that people are able to to buy the brand items at affordable price.

Right. So you mentioned quite a lot of things, for example, how social media,

how online e-commerce platforms and channels, branding, brand loyalty

from educating consumers at a young age.

So with all these competitions within China and also outside of China,

that is going to affect how consumers purchasing habits.

In that way, do you think that China consumers will become

much more sophisticated and they will less likely to buy a big logo brand

as long as they think that it can signal

also, as you mentioned, their status or their identity.

Do you think that they will change into a way become more like consumers worldwide

or do you think that this trend of the affinity to what logo brands are still

going to be the trends in maybe in the next few years or decade?

No, I think they are moving towards searching for other brands

because the big brands, first of all is the price,

the other things they may … the younger generation may look going for

differentiation and some different uniqueness on the consumption item.

So, I think this is a… I think a very interesting era.

You have many big brands and then you know that

the lesser, the cheaper, the lower price brand.

And then recently I also have different retail retail company

approaching us like asking for whether we know there any brands that,

not the big brands, but the niche boutique brands.

They are brands, boutique brands.

They are brands already in US and Europe but not well-known to China.

They actually want those brands coming into China.

So, you can see that they may have reached a certain state of the big brand

and also the big brands, the the issue is now you have many big brands

coming directly to China, have direct store

and you can order directly from their source.

And they are … now because the traveling is more affordable

to most Chinese, Mainland Chinese, they can actually go to Paris, you know,

go to Europe, US to buy the particular product from source

and they find that is cheaper and more authentic.

So, for a local in China market, those brand demand are reducing because,

not because they are reducing the demand for the brand,

but the mark… because they can have other access.

So, within the local China consumption market,

the shopping mall, you know, the retailers are looking for

different items to fill that gap, you know,

and that's why now they're looking at boutique brand.

So, at this moment in time, boutique brand are actually in demand.

Well, that's very interesting.

Perhaps to wrap up our discussion, can you give the example of the boutique brand?

Let's say, as an entrepreneur without much Chinese experience,

using the boutique brand as an example,

do you think that how do you start using the …

let's say the brand is not well-known, it’s quite small in China,

what kind of branding or what kind of strategies do you experience

with these boutique brands that can help them to market their boutiques?

Yeah, that's why it all has to be all in one package.

Because, for example, if one person alone, you and me starting a boutique brand,

it may not be as effective as a large retailer

who already have a loyal customer base.

So now we're moving to a … have to … have the membership

is like a... the loyal customer base.

There is a customer base we’ve been following them

to buy different type of products.

So, it'd be easier for them to market the boutique brands because,

you know, when they do their sales,

they already have a group of customers will trust this seller.

And hence now I think it's building up

there is … many things is really interesting.

One is you’ve the building the trust between the retailer and the consumer.

And and they need to trust that you are selling things authentic

and also, you know, things that are of good quality and value to them.

And and then also you have to have to

have a particular medium to reach them

either online or offline, you know,

that's why we now we call it ‘omni channel’.

We have the the entire channel whether online or offline

to reach them and reach the target market you want.

So, it is like looking at the entire ecosystem

rather than, say, ‘Ah! I got this brand. I really can sell.’

So, what we say, you know, we don't just talk to brand;

because a lot of, I think, seller has … make this mistake is talking to brand.

They think the brand because of the brand would sell, but it's not necessarily.

I think you have to talk to consumer,

you know, who you want to sell and,

you know, which market, you know, which city,

which province you want to sell,

and then what sort of, like, behavior of those consumers are;

and then you target them to the different channels.

And I think this will be will be the …

the marketing spectrum that we are looking at in China.

I think that's a … these are very good advices for our viewers.

So, thank you so much for sharing with your experience with us today.

Right, okay. Thank you.

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