INSIDE THE MIND

OF CHINESE
CONSUMER
Group 1:
Sahil Guleria
Suhani Khandelwal
Sonali Sharma
Radhika Mittal
Sarath S Kumar
Rushil Anand
INTRODUCTION

• Companies around the globe have been clamoring to do business with or in China
• Torrid pace of GDP growth has been fascinating companies around the globe
• This eagerness has given rise to unclear and conflicting ideas about business in or with China
• Western world views China as a “production powerhouse”
• Companies fantasize of getting a billion customers available in China to buy their foreign goods

• Many foreign companies don’t really understand Chinese companies and consumers
• Without a reliable portrait of who the Chinese people are and how they are changing, companies have struggled to define
and address the opportunities present in the world’s most populous nation
• Gallup Organization undertook a ten year nationwide survey from 1994 to 2004 to fill this gap

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 MISCONCEPTION 1
PRIMARY AIM OF WORKERS IS TO WORK
HARD AND GET RICH

The survey was conducted by a series of questions addressing

the personal philosophies of the workers.

Survey findings:
 Only 2% of workers had that view.
 Workers should get self satisfaction and self expression in their
job.
 The percentage of workers exhibiting this trait doubled over the
past decade.
 Young people (18-24 years) were prioritizing more for work life
balance than for money.

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 MISCONCEPTION 2
CHINESE WORKERS ARE HIGHLY DEDICATED

Emotional bond between company and employee tested by the engagement

metric assessment.

Survey findings:
 Workers in china aware of what their job requires. Unlike their
counterparts.
 No passion or personal connection to work; disengagement(68%)
 20% hate their jobs.
 Larger the organization, lesser the personal engagement and connection to
the workplace.
 88% have no interest in their jobs, thus low productivity- increased cases of
absenteeism, on-job accidents and low overall performance.
 High number of actively disengaged vs low number of engaged workers.

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 THE MANAGEMENT CHALLENGE

 Chinese managers treating workers as automatons; not as

individuals with needs, strength and growth potential.
 Lack of focus on human development.
 True potential will be lost due to disengaged workers.
 Need to embrace the idea that an efficient assembly line
requires personal gratification and individual development.
 MNC entering China, new HR policies, practices and people
management methods will be introduced which may try to
overcome this challenge.
 Success of MNC like P&G, KFC will depend on active
assistance of their employees.

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 MISCONCEPTION 3
CHINESE CONSUMERS NOW HAVE A
LOT OF MONEY TO SPEND

 Despite the overall increase in household income, the

average income rose to 30% from 1997 to 2004
 China’s average household income was still less than
$1800
 Only 5% of people were “Very Satisfied” with their income
– a drop from 9% in 2000
 Even the relatively affluent were clearly happier about their
income status and were hardly complacent

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MISCONCEPTION 4
THE BIGGEST MARKETS AMONG CHINESE CONSUMERS ARE FOR BASIC
HOUSEHOLD PRODUCTS

 More attracted towards higher technology products.

 want more than just function, that enhances enjoyment.
 Companies planning to sell products in China needs to focus on emotional and physical needs.
 Two thought process of Western Managers for urban market of China:
1) Increase in average income as an opportunities across an entire nation
2) Division of China into two worlds:
a) the cities of Beijing, Guangzhou and Shanghai
b) all other location

 Urban dwellers are more attracted towards brands based on direct experience and word of mouth whereas first-time sale
approach is used for rural areas.
 Survey revealed strong appetite towards some must have products such as TV, mobile phones etc. and fun products such
as stereos and digital cameras, computers etc.
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 AUTOMOBILE- AN EXCEPTION

 Still poised for first purchase

 Though intense competition is forcing price to drop, cars still

cost two to three times most people’s annual income

 Biggest consumers are urban and the affluent

 Affluent for the car companies are those people who can be
attracted through creative financing

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 CONCLUSION
 The Chinese hunger for many goods and services doesn’t necessarily mirrors that seen in other developing countries
 A Chinese consumer is neither complacent nor compliant
 Past may be a poor predictor of the future in the Chinese market

MISCONCEPTION LEARNINGS
 Work hard and get rich  New “me” generation is emerging, need new HR policies,
 Highly dedicated to their employers and engaged with practices, and people management methods for
their work motivation
 Chinese consumers have a lot of money to spend  Instead of managing Chinese workers as if they were
interchangeable automatons, view them as complete
 All Chinese are benefiting equally from the rise in China’s human beings with individual strengths, needs, and
average income growth potential
 The biggest markets among Chinese consumers are for  The market may not offer as much potential as its size as
basic household products most Chinese still remain poor to buy what they want
 Emphasize repeat and replacement purchases over first
time acquisition and more of word-of-mouth than
company managed communications
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 Ensure that the offerings provide as much style appeal as
performance reliability
THANK
YOU!