In the big, fast-moving consumer goods company my wife works for, management devotes a lot of energy to their China strategy. Last year one of their products, a mosquito repellent for children, sold really well in China through Diagous (Chinese shopping agents). This year they produced more of the same product specifically for the Chinese market, and thoughtfully added labels with Chinese information. To their great surprise, the product did not sell as well.
The marketing department could not understand why. They consulted an external expert, who came up with an explanation that I could have given them for free: it was a mistake to put a Chinese label on their product. The Chinese wanted that company’s products because they were Australian made. They believed that Australian products were safe, especially products for children (such as baby formula). To look like a good Australian product, there should have been no Chinese label at all. When they saw the Chinese label, consumers were simply less interested in buying.
there should be no Chinese labels on Australian products
Inside China, some Chinese companies make products with all-English packaging and market them as foreign brands. This is a very popular technique in the second-and third-tier cities in China. Consumers in these cities have relatively less experience of shopping overseas, and the leading foreign brands have yet to reach their shopping centres. So in these places you may find Chinese burger shops looking like McDonald’s and fried chicken outlets looking like KFC, along with many ‘European’ fashion brands you will never find in Europe.
Surprisingly, this dodgy strategy has worked pretty well in these cities. This success rests on the widespread perception that foreign products are of higher quality than locally made products.
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I found the consumer behaviour of the younger generation of Chinese was not that different from the younger generation of Australians. They might be using difference social media, but they follow a similar pattern when making purchases. For example, my friend Joyce, a 90-hou (hou means ‘after’ in Chinese), told me she buys all her clothes online because she can make purchase decisions without anyone else’s help.
This is something my (80-hou) generation would not do. We trust physical shops more than online shops. And we prefer to try clothes on than just see them on models. I know I will never look the same as the models online. But apparently Joyce can picture the item better on the models than on herself, and can save herself the trouble visiting the shop to try it on.
We trust physical shops more than online shops
I am very sure that many of the younger generation of Australians would agree with her. I recently got to know a successful entrepreneur in Sydney, the founder of online retail brand, Showpo. Jane Lu markets all her clothes online through Facebook and Instagram, and she does much better than the big retail players in attracting customers between the ages of 16 and 29.
The traditional department stores operated by and for the older generation never believed it would be possible to sell millions of dollars’ worth of clothes per month online, but the younger people made it happen. The lesson I took from this was that I should no longer trust myself and my own preferences when advising clients on how to sell to the Chinese. Rather, I needed to find out more about the actual market they wanted to target, especially if it was the younger generation.
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This is an edited extract from The New Chinese by Barry Li – an essential guide to the history, culture and mindset of Chinese migrants in Australia, and of the new China.