RIDING ON EMOTIONS
Chinese consumers are seen as emotional and fickle — and companies are racing to keep up with their changing tastes, reports.
When China’s President Xi Jinping dropped in for a pint at an English country pub with Britain’s Prime Minister David Cameron in October, few could have foreseen that it would start yet another Chinese consumer craze.
Within a few weeks monthly sales in China of the beer they drank, Greene King IPA, soared from 6,000 bottles a month to 80,000 bottles a month.
The Chinese, who normally drink their own lagers such as Tsingtao and Yanjing, had suddenly developed a taste for English bitter ale.
The brewer that makes the beer was the latest to benefit from the seemingly unquenchable desire of Chinese consumers to have the next latest thing.
This often emotional and sometimes erratic behavior is “shaking the world”, Jeffrey Towson, professor of investment at Guanghua School of Management at Peking University, said in a recent article.
China is a vital market for virtually all leading global consumer brands, yet the spending behavior of the country’s consumers is so volatile that trends are becoming increasingly unpredictable. They do not often behave the way usually seen in Western markets, experts say.
So foreign multinationals — like Chinese companies that are just as desperate to capture their own domestic market — are having to adjust their business models and align them with the latest trends and fashions in the world’s second-largest economy.
So there was much interest last month in the publication of the 2016 China Consumer Report, The Modernization of the Chinese Consumer, by the international management consultants McKinsey & Co.
It was the 11th such annual report, for which 10,000 consumers were interviewed.
Daniel Zipser, partner at McKinsey’s Shanghai office and the leader of its consumer and retail practice in Greater China who was co-author of the report, said it is the speed of the consumer trends that presents the biggest challenge to companies.
“You see brands emerging from nowhere to be worth a billion dollars in just 12 to 18 months. We just haven’t seen that in the Western world.”
Despite the recent slowdown in the Chinese economy, Chinese consumers remain among the most confident in the world.
In the latest survey, 55 percent of respondents said they expected their household income to rise over the next five years, barely unchanged from the 57 percent in 2012.
This contrasts with only 30 percent of United Kingdom consumers and 32 percent United States consumers, offering similar sentiments when they were last polled in 2011.
“Although there are regional differences with consumer confidence in Northeast China (an area of declining heavy industries and higher unemployment)
You see brands emerging from nowhere to be worth a billion dollars in just 12 to 18 months (in China). We just haven’t seen that in the Western world.”
partner at McKinsey’s Shanghai office and the leader of its consumer and retail practice in Greater China