Misconceptions about the Chinese Consumer

As most of you know, China is the most populated country in the world, if fact, Shanghai is the largest city in the world with over 24 million residents. China has ten cities with more than ten million residents. It also has 145 cities you may have never heard of, each with more than one million residents. 

After the USA, China is the second largest economy with explosive growth and the fastest growing middle-class. Therefore, China is truly a huge opportunity!

1. Everything is Cheap

Although the cost of living in China is lower than the USA, average Chinese consumers are just starting to earn enough to splurge on premium products. For example, a Starbucks latte costs a dollar more in China than in the USA and China has still become Starbucks second largest market. Labor costs (based on productivity) are only 4% less expensive in China than in the USA. Therefore as a production center and market, China can no longer be considered cheap.

2. Chinese Eat Anything & Everything

Although Chinese consumers are known to eat delicacies or ‘exotic’ foods such as shark fin soup and chicken claws, in reality, 72% of consumers are worried that the food they eat is harmful to their health. Food safety is one of the most sensitive topics and Chinese consumers are spending a big portion of their income on imported food. Food safety scandals range from dairy including fake eggs and toxic milk to plastic rice. For many categories, consumers do not trust local suppliers. This has created a demand for imported products which they can trust to be safe for them and their family.

3. They Can’t & Don't Drink

Although some Asians can't metabolize alcohol as well as non-Asians, Chinese drink more beer and wine than any country on earth. They have a strong drinking culture where high alcohol spirits, like baijiu, are chased with many bottles of beer. They are even known to drink many foreigners under the table at business meals.

4. Chinese Only Eat Rice & Traditional Chinese Food

Although rice is culturally important and served with many meals, Chinese consumers are experts in food. They put a huge emphasis on flavor and have an appetite for new products. This allows foreign brands to be very creative in product innovation to satisfy the demands of local consumers. Lay’s has adapted their potato chip flavors, inspired by local dishes like cucumber, blueberry, braised pork and spicy hotpot flavors.

5. Everyone Speaks & Reads English

In most of China, 'Chinglish' can be found everywhere. Although English is taught in school, less that 1% of all Chinese speak English. This creates a challenge when bringing western brands with only an English name into China. Compared to other Asian countries, like Singapore where English literacy is over 80%, 46% in Hong Kong and 12% in Japan, Chinese consumers may not remember or be able to talk about your brand name if it is only written in English.

6. They All Shop Online

Although China has 400 million e-shoppers, the trend of “Retail-tainment” has increased in recent years and two-thirds of consumers enjoy going to shopping malls and shopping as an activity with their families. There is an online to offline to online consumer journey and often both retailers and digital platforms are involved in the final sale.

In addition, 120 million Chinese traveled abroad in 2015, spending $194 billion USD in other countries. About two-thirds of those Chinese travelers were millennials, and they accounted for half of Chinese outbound travel spending. These trips are often categorized as shopping vacations and many travelers decide their travel destination based on shopping opportunities, a huge opportunity for brand exposure domestically and abroad.

7. Government Control

Technically, the great firewall is very real, but when it comes to spending, capitalism is encouraged. Chinese consumers have high standards for customer experience, they shop around comparing quality and price to make careful purchase decisions. They are price sensitive and know they have options.