Meet the Chinese Consumer of 2020

April 21, 2013

 

Most large consumer-facing companies realize that they will need China to power their growth in the next decade. But to keep pace, these companies will also need to understand the economic, societal, and demographic changes shaping the profiles of consumers and the way they spend. This is no easy task not only because of the fast pace of growth and subsequent changes in the Chinese way of life but also because of the vast economic and demographic differences across the country.

The preceding quote is from the latest “DFS Learning e-Blast” article, Meet the Chinese Consumer of 2020, by Yuval Atsmon and Max Magni.

In this March 2012 McKinsey Quarterly article, the authors discuss changing demographics, new spending patterns, and the implications on companies.  This is one of a series of articles we’re sharing on our growing PRC consumer.  It is important for us to understand the context of this critical consumer’s evolving needs, desires, and behaviors as we seek to effectively meet their shopping needs in the markets where we serve them.

More from the article:

Many of the changes taking place in China are common features of rapid industrialization:  rising incomes, urban living, better education, postponed life stages, and greater mobility.  Japan saw similar changes in the 1950s and 1960s, as did South Korea and Taiwan in the 1980s. 

But some unique factors are also at work, such as the government’s one-child policy and the marked economic imbalances among regions. Our analysis reveals important insights into the likely demographic and socio-demographic profiles of Chinese consumers at the end of this decade.

Read the short article to learn more!

Mike Osorio, your Dare to be Contagious™ strategist

www.OsorioGroup.com

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Top 10 Consumer Trends of China’s Wealthy

February 10, 2013

With fast rising wealth and money to spend, it’s no surprise the Chinese are in a buying frenzy. China’s consumer spending is growing at an average annual rate of 18 percent compared to 2.2 percent rise for the US, according to the National Bureau of Statistics.

While some of their purchases are just plain glitzy, studies and research from organizations like the United Nations, Eurmonitor and McKinsey & Co. show that Chinese consumers are displaying great consciousness for bettering themselves and their planets.”

The preceding quote is from the latest “DFS Learning e-Blast” article, Top 10 Consumer Trends of China’s Wealthy, by Rajeshni Naidu-Ghelani.

In this July 28 2011 article on CNBC, the author discusses where the Chinese wealthy are focusing their purchases.

As a follow up to last week’s article which covered the more detailed McKinsey 2011 Chinese Consumer Spending Survey, today’s article provides headlines of the major consumer trends.

More from the article:

Some consumer trends in China are well known, such as the increasing demand for luxury goods, but others may surprise you. CNBC.com put together a list of 10 major consumer trends, including the companies and sectors they have the potential to profit from them. The list is based on studies and reports from international organizations such as the United Nations, the U.S. Department of Agriculture, and research firms including Euromonitor International and McKinsey & Co.”

Read the short article to learn more!

Mike Osorio, your Dare to be Contagious™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments to join the discussion!

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China’s Confident Consumers

January 3, 2013

China’s Confident Consumers

All:

 

The Chinese have taken to consumerism with ease, embracing thousands of new products, services, and brands. But the flipside is that the Chinese market changes at a speed capable of leaving all but the nimblest of companies breathless, as McKinsey’s 2011 survey of Chinese consumers highlights.1 Three findings stood out. Even in the face of rising inflation, Chinese consumers are more confident this year than in 2010 about their financial prospects. Among urban consumers, the number of first-time buyers—a group that has been a major driver of category growth in China—is declining. Finally, although brand awareness is rising, we see little sign that brand loyalty is following suit. In fact, more and more consumers choose among a growing number of favorite brands.”

 

The preceding quote is from the latest “DFS Learning e-Blast” article, China’s Confident Consumers, by Yuval Atsmon and Max Magni.

 

In this November 2011 article from McKinsey Quarterly, the authors discuss the recently published 2011 Annual Chinese Consumer Survey by McKinsey Insights China.

 

At a time when our PRC business is exploding in virtually all our retail locations, it is important for our leaders to understand the underlying factors influencing Chinese consumer behaviors.  By understanding the evolving Chinese consumer mindset we can make better decisions on how we serve this important client today and into the future.

 

More from the article:

 

The survey shows the extent to which consumers value brands more than price or channel, largely because they believe that branded products are safer, of higher quality, and more reliable than nonbranded ones. But faith in brands still does not translate into brand loyalty. In fact, both the number of consumers who always choose from among a relatively small set of brands—whom we refer to as “repertoire loyalists”—and the number of brands in their repertoire continue to rise. The average Chinese consumer now chooses among three to five brands in any given category, compared with two to three brands two years ago. In some categories, such as apparel, where luxury brands have grown hugely popular, the contrast is sharper still.”

 

Read the short article to learn more!  The full survey is available here as well.

 

Mike Osorio, your Dare to be Contagious™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments to join the discussion!

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Do we need to learn Mandarin?

March 3, 2009

DISCUSSION TOPIC

Tesco Chairman Promotes Mandarin Lessons 3/3/09

TOPIC SUMMARY:

David Reid, chairman of Tesco PLC, criticized the U.K. educational system for not teaching enough Mandarin in its schools. According to Mr. Reid only 10 percent of schools in the U.K. offer language lessons in Mandarin as part of the curriculum.

According to a report by The Scotsman, Mr. Reid told an audience at the headquarters of the Royal Bank of Scotland, “This has to change. The unprecedented speed and scale of changes in China means the U.K. cannot afford a slow transformation, as that will deny British young people the support they need to best prepare them for a future in which China will play a big role.”

Mr. Reid has the support of Gordon Brown, the British Prime Minister, in seeking to expand Chinese language and cultural programs. Mr. Brown said in January, “If we are to make the most of our relationship with China, we need to understand China better, through our schools, universities, cultural institutions, our businesses and in government. I am determined to do that.”

Discussion questions:  How critical is it for Americans to learn Mandarin for U.S. businesses to remain competitive in the future? Are there other languages that are equally or more important for American workers to learn? Is the American educational system adequately preparing students for an increasingly global marketplace?

My post: 

English standards in American schools must improve markedly.  English will remain the primary language of business for the foreseeable future.  However, learning a second language is also a critical skill – not only for working in an increasingly global workplace, but also for learning about world cultures and helping to avoid fundamentalist attitudes.  Mandarin, Hindi, Arabic and Spanish would be the key languages for helping ready our youth for possible international work opportunities – but any of them will do for the purpose of expanding minds and hearts.

Mike Osorio, your Dare to be Contagious! TM strategist

www.OsorioGroup.com

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Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13587

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Should retailers raise prices?

April 21, 2008

DISCUSSION TOPIC:  Inflation Rears Its Ugly Head

TOPIC SUMMARY:

Another retro trend from the seventies is working its way back to retail. Unfortunately, it’s inflation.

Retail prices are expected to rise in many categories – e.g., apparel, footwear, toys and electronics – that have largely enjoyed a deflationary cycle over the last two decades. For retailers, many will be challenged to raise prices without irritating customers who have grown used to bargains.

The reason for the price gains are mainly due to higher manufacturing costs coming from China. Among the factors driving up the gains: rising wages in China, the devaluation of the dollar against the (RMB), escalating raw material costs such as steel, and rising fuel costs that are increasing freight costs and the cost of plastic. And many of these drivers – particular the weakening dollar against the yuan – are expected to get worse before getting any better. According to an article on Slate.com, some Chinese factories are now asking their American customers for price increases of as much as 20 percent to 30 percent.

That leaves American retailers to devise new pricing strategies to avoid overwhelming consumers hooked on $3 T-shirts and $30 DVD players. A manager of several discount stores confided to Slate.com that his company has started raising prices of certain goods while putting others on sale. Others are considering bringing in lesser quality goods to meet price points expected by consumers, or being more aggressive around opportunistic buys.

Longer term, suppliers will be challenged to find a manufacturing hub as cheap as China. Other countries seen as possible replacements, such as Vietnam and India, don’t have infrastructure to handle the volume production that the world depends on for cheap goods. Other countries expected to gain a stronger look include Indonesia, Mexico, Malaysia, as well as Brazil or Kenya.

Discussion questions:  How can a retailer maintain its value proposition to consumers in industries facing inflationary pressures? Should they be raising prices sooner rather than later?

My post:

I predict the silver lining in the current situation will be the failure of several so-called retailers which are really private equity owned financial instruments (some of which has already started).  When a retailer’s strategies are based on the basis of short-term financial results needed by short-term financial owners, a sustained downturn will frequently crush that retailer.  The ability of a retailer to raise prices appropriately based on real market conditions depends on the level of trust built with their customers over time.  Trust comes from strategies based on the customer and the brand vision.  Retailers who have built trust can phase in price increases because their customers will trust that this is appropriate given the market realities.  

Prices must be raised now vs. later to ensure the continued financial health of the enterprise.  Those retailers with strong trust-based relationships with their customers will continue to thrive, and those that don’t, won’t.

Mike Osorio, your Dare to be Contagious! TM strategist

www.OsorioGroup.com

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Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/12906    

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Thank you for visiting my blog!  Please subscribe using the RSS button and comment on my postings.  Comments are the life-blood of any blog and I appreciate yours!