What Chinese Consumers Want
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Marketing Sep 8, 2015

What Chi­nese Con­sumers Want

West­ern Com­pa­nies doing busi­ness in Chi­na need to ask the right questions.

Like yin yang, the Chinese consumer's psyche is all about finding a balance

Yevgenia Nayberg

Based on insights from

Angela Y. Lee

For decades, West­ern com­pa­nies have sought to under­stand Chi­nese con­sumers. And with mar­ket research firms now track­ing every sec­tor in great detail — from lux­u­ry goods to health­care prod­ucts to the lat­est trends in e-com­merce — a more sophis­ti­cat­ed pic­ture of the mar­ket is emerging.

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But com­pa­nies still have much to learn about the cul­tur­al gap sep­a­rat­ing the aver­age Chi­nese con­sumer from his or her coun­ter­part in the West — just as they have much to learn about the dis­tin­guish­ing cul­tur­al fea­tures of any oth­er mar­ket, from Brazil to Nige­ria to Indone­sia. Such knowl­edge may not have been cru­cial in the heady days of the 1990s, when the Chi­nese econ­o­my was still emerg­ing and oppor­tu­ni­ties seemed to be end­less. But now that the mar­ket has grown and matured, expand­ing into Chi­na requires a deep­er appre­ci­a­tion for the impact cul­tur­al tra­di­tion can have on con­sumer psychology.

In the ear­ly days, you almost didn’t need a strat­e­gy — you could make mon­ey as long as you had con­nec­tions or guanxi,” says Angela Lee, a pro­fes­sor of mar­ket­ing at the Kel­logg School and an expert on cross-cul­tur­al issues in con­sumer behav­ior. But that’s not the case any­more. Now, those com­pa­nies that have a gen­uine under­stand­ing of Chi­nese con­sumer cul­ture are bet­ter placed to succeed.”

Lee points out that even West­ern com­pa­nies that have achieved some suc­cess in Chi­na may not ful­ly appre­ci­ate the dif­fer­ences between West­ern and Chi­nese con­sumer psy­cholo­gies. Even when we think we have an open mind, we may not,” she says. There are psy­cho­log­i­cal dif­fer­ences between East Asian and West­ern soci­eties that com­pa­nies should be aware of. Those who under­stand the nuances of Chi­nese con­sumer psy­chol­o­gy have a bet­ter chance of long-term success.”

So what steps can West­ern com­pa­nies take to bridge the cul­ture gap?

Do More Qual­i­ta­tive Research. Qual­i­ta­tive research pre­cedes quan­ti­ta­tive research,” Lee says. Both are essen­tial in order to have a com­plete pic­ture of the mar­ket. Quan­ti­ta­tive research requires a struc­tured way of col­lect­ing infor­ma­tion, but how you struc­ture that infor­ma­tion comes from your qual­i­ta­tive research.”

Those who under­stand the nuances of Chi­nese con­sumer psy­chol­o­gy have a bet­ter chance of long-term success.”

Con­sid­er, for exam­ple, a snack-food com­pa­ny that wants to offer its cus­tomers a health­i­er pota­to chip. The obvi­ous answer for the U.S. mar­ket is to remove the oil, sodi­um, and oth­er ingre­di­ents that can cause long-term health issues. In Chi­na, how­ev­er, cus­tomers might expect a dif­fer­ent solu­tion. There, it’s not about tak­ing things out — it’s about putting oth­er things in,” Lee says. Because tra­di­tion­al Chi­nese med­i­cine has a dif­fer­ent sys­tem for cat­e­go­riz­ing healthy food, includ­ing an impor­tant dis­tinc­tion between heaty” and cool­ing” dish­es, a cucum­ber-fla­vored pota­to chip might have the most appeal to health-con­scious con­sumers, since it bal­ances out the heati­ness” of the deep-fried or baked chip with a clas­sic cool­ing” ingre­di­ent. Good qual­i­ta­tive research would have led the com­pa­ny to acknowl­edge this tra­di­tion — for exam­ple, by ask­ing con­sumers in a focus group why they do not eat more pota­to chips and then inquir­ing about what kinds of food would fall where on the heaty – cool­ing scale.

In oth­er words, quan­ti­ta­tive data is mean­ing­less — or at least dif­fi­cult to inter­pret — unless you have asked the right ques­tions. And with­out a firm grasp of the fun­da­men­tal cul­tur­al dynam­ics, it is very hard to ask the right questions.

Cre­ate Use­ful Sur­veys. Once a com­pa­ny knows what ques­tions to ask, it must care­ful­ly con­sid­er how to ask them. For exam­ple, mar­ket researchers in Chi­na still con­duct sur­veys, but researchers have learned to adjust the scales to fit an East Asian con­text. A sur­vey designed for a U.S. audi­ence might ask con­sumers to rate a prod­uct on a scale of one to sev­en, but this turns out to be less infor­ma­tive in Chi­na or Japan. In North Amer­i­ca,” Lee says, peo­ple tend to move toward the extremes, while in Asian cul­tures peo­ple tend to stay away from extremes — they see extremes as unde­sir­able. Peo­ple want to be polite; they believe in mod­er­a­tion. So if you give them a scale of one to sev­en, you will get a lot of fours, which isn’t very use­ful.” Proc­ter & Gam­ble encoun­tered this prob­lem while doing mar­ket research in Japan; its solu­tion was to use a six-point scale, which forced con­sumers to express a more defin­i­tive view of a product.

Under­stand the Impor­tance of Hier­ar­chy. Con­sid­er the para­dox between sav­ings and spend­ing: while Chi­nese con­sumers have rel­a­tive­ly high sav­ings rates, they will also pay high pre­mi­ums for cer­tain lux­u­ry items, espe­cial­ly those that are used in pub­lic, like watch­es or mobile phones. It’s a very hier­ar­chi­cal soci­ety,” Lee says, and one way to dis­tin­guish one­self is through consumption.”

Chi­nese con­sumers also tend to invest heav­i­ly in their chil­dren, which often means pay­ing up for things like baby for­mu­la and pri­vate tutors. Part­ly, this has to do with a major shift in the fam­i­ly struc­ture. Chi­na used to be the pro­to­typ­i­cal col­lec­tivis­tic cul­ture, and par­ents were very respect­ed by the chil­dren; but that is chang­ing now because of the one-child pol­i­cy,” Lee says. The child has become more impor­tant in the fam­i­ly unit, with par­ents and grand­par­ents all try­ing to help their chil­dren rise up in a fierce­ly com­pet­i­tive society.”

Under­stand That Oppo­sites Can Coex­ist. Lee says East Asian cul­tures are more com­fort­able with the idea of two oppo­sites coex­ist­ing. It goes back to the dif­fer­ence between Aris­to­tle and Con­fu­cius,” she says. West­ern soci­eties believe in log­ic — where some­thing is either A’ or not A’ — so deal­ing with log­i­cal incon­sis­ten­cies caus­es great dis­com­fort. East Asians are able to accept that some­thing could be both A’ and not A’ at the same time. The yin and yang is the clas­sic sym­bol of oppo­sites coexisting.”

To see how this increased com­fort with con­tra­dic­tion may be rel­e­vant for com­pa­nies, con­sid­er prod­uct reviews. Amer­i­can con­sumers tend to be more polar­ized,” Lee says. When they read a pos­i­tive review and a neg­a­tive review, they will choose to believe either one or the oth­er, because they like to have a sin­gle, con­sis­tent view of a giv­en prod­uct.” Chi­nese con­sumers, by con­trast, take a more nuanced approach by account­ing for pos­i­tive and neg­a­tive reviews simultaneously.

Under­stand the Impor­tance of Rela­tion­ships. As a soci­ety, Chi­na places tremen­dous val­ue on har­mo­nious rela­tion­ships — some­thing mar­keters may wish to empha­size when craft­ing mes­sages. Indi­vid­u­al­is­tic soci­eties val­ue per­son­al goals and accom­plish­ments, and col­lec­tivist soci­eties val­ue group goals and accom­plish­ments,” Lee says. Chi­nese con­sumers may respond bet­ter to ads that place an empha­sis on fam­i­lies or rela­tion­ships, rather than those that put more stake in per­son­al pride and autonomy.”

Pre­pare for Con­sumer Changes — but Do Not Ignore Tra­di­tion. Lee is quick to empha­size that Chi­nese con­sumer behav­ior is not a sta­t­ic phe­nom­e­non. The Chi­nese con­sumer is prob­a­bly evolv­ing faster than con­sumers in oth­er coun­tries. So in one sense, it’s a sig­nif­i­cant chal­lenge for com­pa­nies to keep up.” Con­sumers with more dis­pos­able income are grow­ing more sophis­ti­cat­ed, the land­scape changes fre­quent­ly as new play­ers enter the mar­ket, and urban areas con­tin­ue to swell. It’s a very dynam­ic mar­ket,” she says, and it’s also high­ly adap­tive,” which bodes well for long-term sta­bil­i­ty even as the coun­try faces a stock mar­ket cri­sis and eco­nom­ic slowdown.

But this dynamism does not mean that Chi­nese tra­di­tion is obso­lete. The mar­ket will con­tin­ue to change, but there are ele­ments of con­sumer behav­ior that are root­ed in the psy­chol­o­gy of a cul­ture, and rec­og­niz­ing that can make a big difference.”

Featured Faculty

Angela Y. Lee

Mechthild Esser Nemmers Professor of Marketing, Chair of Marketing Department

About the Writer

Drew Calvert is a freelance writer based in Iowa City, Iowa.

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