Con­sumer di­chotomy in fo­cus

New KPMG sur­vey shows for­eign brands can thrive in na­tion through lo­cal part­ner­ships

China Daily (Latin America Weekly) - - Business - By HE WEI in Shang­hai [email protected]­nadaily.com.cn

Con­sumers

Two dis­tinc­tive sets of con­sumers are on the rise in China, each with its own mo­ti­va­tions and spend­ing pat­terns, which leaves room for new busi­ness en­trants to cash in on the world’s largest con­sumer mar­ket, a sur­vey has found.

The first silo is mid­dle-in­come earn­ers and above, typ­i­cally re­sid­ing in top-tier cities like Bei­jing and Shang­hai, and will­ing to pay a pre­mium for qual­ity, said global con­sul­tancy KPMG in its re­search on con­sumer in­sights re­leased ear­lier this month.

Mean­while, the se­cond per­sona be­longs to a more price­con­scious con­sumer group, which has more time and less money and there­fore re­gards on­line rev­o­lu­tion as a way to stretch their bud­gets.

“China’s con­sumers are born of two very dis­tinc­tive paths, and that’s some­thing very dif­fer­ent from other coun­tries,” said Willy Kruh, part­ner at KPMG and global chair for its con­sumer and re­tail prac­tice.

Such di­chotomy is giv­ing new play­ers plenty of op­por­tu­ni­ties to en­joy rapid growth, even if the mar­ket has seen mega plat­forms like Alibaba’s Tmall to the mes­sag­ing-to-pay­ment WeChat.

Kruh cited Pin­duo­duo, an e-com­merce plat­form, which pro­cessed 5.3 bil­lion trans­ac­tions in 2017, in less than two years since its found­ing. This and the spec­tac­u­lar growth of other ser­vices like teenager­friendly so­cial me­dia app Douyin show the dy­namism of the mar­ket.

“Douyin and the Lit­tle Red Book il­lus­trate the rapid user­gen­er­ated con­tent, which is lead­ing to fur­ther frag­men­ta­tion of con­sumer at­ten­tion,” said Kruh.

He noted that in­flu­encers emerg­ing from these plat­forms, who are known as key opin­ion lead­ers or KOLs, are ac­tive in ev­ery sphere of China’s on­line life, from busi­ness to fi­nance, ex­ert­ing a much wider in­flu­ence on au­di­ences than their coun­ter­parts in the United States and Eu­rope, who are mostly con­fined to the life­style niche.

“The un­re­lent­ing, ubiq­ui­tous na­ture of tech­nol­ogy in this mar­ket means that con­sumers’ time and at­ten­tion are more frag­mented, more com­plex to un­der­stand, and more chal­leng­ing for or­ga­ni­za­tions to se­cure,” he said.

“For brands, you can’t just think about grab­bing all cus­tomers. You are go­ing to miss that huge, multi-hun­dred mil­lions of pop­u­la­tion.”

In re­sponse to this is­sue, Kruh sug­gested for­eign brands to forge lo­cal part­ner­ships and get ad­vised on mat­ters such as mar­ket en­try and reg­u­la­tory re­quire­ments, in or­der to have a clear map­ping of the mar­ket to hit the ground run­ning.

De­spite the di­ver­gence, Chi­nese con­sumers are gen­er­ally more mo­bile-cen­tric and tech-savvy than their coun­ter­parts in other coun­tries.

Some 70 per­cent of those sur­veyed by KPMG said they would rather lose their wal­let than their phones — a stark con­trast to any other coun­try sur­veyed.

SUN QING / FOR CHINA DAILY

throng the Hai­tang Bay duty-free shop in Sanya, in the is­land prov­ince of Hainan.

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