China’s New Consumers

“It’s expected that these consumers will dip into their savings and give China’s economy a helping hand,” said Shenan Chuang, CEO of Ogilvy & Mather Group China. “But for them to do so, companies need to understand what drives their needs, aspirations and ultimately purchase decisions.”

In China Beyond, qualitative research conducted from March to November 2008, the company looked at 4th to 6th tier towns, surveying everything from rural attitudes toward family, life, ambition and fashion to media habits and influences on purchase decisions. With an average household income of $845, their disposable incomes grew by 10.3 percent in the first half of last year.

Among the findings: Households in small towns usually have two children, unlike higher-tier cities where China’s one-child policy is more strictly enforced, creating a family dynamic where siblings have more influence. Marketers can find opportunities in helping to create a better future for those children, according to the study, who also lag behind peers in higher-tier cities in their understanding of the Internet for information and education.

The research also notes that because rural consumers have a natural affinity for open spaces, outdoor advertising can be used to tell more engaging stories rather than just build awareness. Food and beverage brands, for example, can use promotional tables and fixed umbrellas to bring people together. Additionally, hypermarkets and convenience stores are fast replacing mom-and-pop stores and wet markets, but the emphasis is on local and national brands. Nonetheless, counterfeits of some Western consumer brands, which symbolize success, are thriving. That is different from higher-tier markets where luxury fake brands proliferate.

Ogilvy also notes that easy, fast communications and cheap transportation are changing distribution rules. Distributors no longer need to be in the most convenient areas, enabling them to sell to a broader range of consumers.