After decades of deprivation and conformism, Chinese consumers regard expensive consumer goods as trophies of success. In public, they show off. In private, they pinch pennies. The owner of a gleaming new BMW will drive around for half an hour to avoid a 50 cent parking fee. And she will hesitate to spend much on interior decoration, because only her family sees the inside of her flat.
By some forecasts China will be the second-largest consumer market in the world by 2015, not far behind America. Chinese people already buy more cars than people in any other country. China is on its way to becoming the biggest luxury-goods market. The central government made an increase in domestic consumption one of the priorities of its latest five-year plan.
The Chinese government presents its own unique challenges. “Everything is political,” says James McGregor, a former head of the American Chamber of Commerce in China. “This is a government that lets foreign companies build market share when it needs them.” Its longer-term goal is to learn enough from foreigners so it can build its own national champions. To this end, it pushes foreign carmakers, among others, into unhappy partnerships with Chinese state-owned firms.
中国政府面临着不同于别人的挑战。前任美国商会驻华领导James McGregor指出： “一切都是政治，中国政府想让外国公司建立市场份额，以便将来需要的时候使用。”长期目标是想学习外国人，以培养本国企业成为最后胜利者。为此，他们推进国外汽车制造商，包括其他人，进入与中国国有企业合作的不愉快合伙关系。
Buttering up local party bosses
The central government is not the only problem. Companies need to cultivate cordial relations with local potentates, too. Often the provincial governor’s say-so is needed to obtain land, employment licences and a stack of other bits of paper a firm needs to operate. Local party bosses tend to favour local Chinese firms—another reason why tie-ups can be helpful.
Will the Chinese government allow Nestlé to buy Hsu Fu Chi? In 2009 it rejected a $2.4 billion bid by Coca-Cola to buy Huiyan Juice Group, a drinks firm, for no apparent reason. Analysts say that this is unlikely to happen again. “The company is not strategically important and together Nestlé and Hsu Fu Chi would control only about 5% of the market,” says Jon Cox at Kepler Capital Markets in Zurich. As the world’s largest chocolate-maker Nestlé has high hopes for a market of more than a billion people who currently eat shamefully little chocolate.
中国会同意让雀巢收购徐福记吗？2009年中国在无充分理由的情况下，驳回了可口可乐以24亿收购汇源果汁集团的投标。分析家指出：类似情况不可能再次发生。Jon Cox 在苏黎世资本市场上“这个公司在战略上并非相当重要，而且如果雀巢和徐福记一起就可以控制市场份额的5%。”作为世界上最大的巧克力制造商，最近人们吃的很少巧克力，雀巢极度希望市场占有人数可以超过十亿。
Many economists think Chinese households save too much. Some fear a property bubble or a banking crisis. The risks of selling consumer goods in China are immense.
There is a quirkiness to rich Chinese consumers. On the way to Beijing Capitol Airport, look for the line of nice cars parked on the side of the expressway before the last exit. They are saving a few bucks on parking. Business banquets are extravagant but on average days it seemed to me senior executives ate the same basic lunch in the company cafeteria."
Leon HAHA wrote:
"The owner of a gleaming new BMW will drive around for half an hour to avoid a 50 cent parking fee."
Haha, sounds like a few people I know. While such action can be construed as having high financial, I personally feel these people have no proper costing for their time and trouble. I rather attribute such spending patterns to the habits and preferences than superiority of one type of behavior over another.
I can，t deny the fact that chinese like showing off and the government is brutal and corrupt. Each country his its own culture. Only you adapt yourself to it can you survive. And every country also have its national interest.
You still remember that U.S. rejected Huawei to buy an American firm. We have bloody lesson learn.In a city of Gansu province,the water price rise again and again,after the local water processing company was bought by a French company. When Chinese people request the company to prove the rationality of rising,the company refused to do anything. Can you accept that?
By the way, I love China deeply,but I hate xx party.
There is no mystery about Chinese consumers. Many human beings, especially Asians, are like them anyway.
Brand names are important in China. They like ranking things. It，s less about appreciation of quality than proving to your neighbours that you can afford it. Right now, high quality German and French products are "in" (although most Chinese do not really enjoy "stinky" soft cheese).
"The owner of a gleaming new BMW will drive around for half an hour to avoid a 50 cent parking fee. "
That sounds familiar even in Singapore,India . :-) . I think its typical of us Asians to do that.
If you can spend a few hundred thousand dollars to buy a luxury car, why save few cents on parking and how does it display your "high financial"?With authorised parking spaces, at least you do not worry about your car being vandalised or worse - being stolen.
Its just a psychological habit carried over from previous generation, but they had their reasons to do it.I don，t see so much of this habit in the younger generations.They have never seen a famine in their lifetime, have they?But then, I might be wrong.
OK guys... once again
driving around to save 50 cents on parking is not smart. That，s being penny-wise but pound-foolish.
saving on recurring costs is smart. That，s quite different thing. Not being able to tell the difference is ... what can I say?
The Chinese consumers spending on extravagant branded goods based on their meagre incomes is simply not sustainable. In fact , many China hands portend this phenomenon to the coming Collapse of China because this gap between high material expectation and low wages reality will not be easily bridged, and hence generates future discontent with the ruling elites.
Baz P wrote:
I think Chinese consumers are much more rational, but they do have strange consumer habits
Joel T. wrote:
I have experienced first hand how much the Chinese like to show off. I find it extremely tacky too, but it，s how things are over there.
Desire to show off is universal among poor who had some financial success recently, it，s not just limited to Chinese. ，New， Russians are the same way, and so are black people in US.
My advice to marketers in China - when in doubt, bling it out. Even if you are only selling a box of cereal, throw some fake gold chains on it.
There is no need to be pretentious even if you are filthy rich. My rich Sikh landlord slept on the road and earn good money as watchman while sleeping. Thus he can collect multiple stream of income at the same time without being pretentious.
Chinese consumers act just like American consumers in the 1950s and 60s -- everyone，s status symbol was a TV aerial on the roof.