The graphic above summarizes key findings from a recent report conducted by CIC and GroupM about marketing to Chinese youth. For those of you interested in learning more about marketing to Chinese youth in particular, I recommend checking out insights from ChinaYouthology and the GenYChina blog.
While the graphic is a generalization it does; however, highlight key differences between Chinese born in the 1970’s compared to their counterparts born in the 1980’s and 1990’s.
Chinese born in the 1980’s grew up in the wake of the ‘reform and opening’ – a period of tremendous change and economic growth. They spent their entire lives witnessing the world around them transform and modernize. Compared to those born in the 1970’s they tend to prefer more ‘work-life balance’ and have a greater desire to break apart the rungs of the corporate latter. In regards to managing their money, Chinese born in the 1980’s are more willing to use credit cards and take out loans to finance their lifestyles. This is in stark contrast to their peers born in the 1970’s who are still heavy savers.
Chinese born in the 1990’s seemingly grew up plugged into the Internet. They tend to have a disregard for authority, crave self-expression, and blur the distinction between their online and offline worlds. They use the Internet primarily for entertainment purposes. The Chinese web is filled with images of headshots taken with their mobile phones to display their unique personalities for the world to see.
Nike entered China in the early 1980s by relocating its manufacturing facilities from South Korea and Taiwan. However, Nike was not content solely producing its goods in the Middle Kingdom. The company set out to sell to China’s “2 billion feet” as Nike founder Phil Knight put it. Unfortunately, Nike experienced challenging times trying to convince Chinese consumers to purchase its premium athletic shoes in a culture where historically education is number one, and not much emphasis is placed on athletics. To create a market, Nike partnered with local schools, funded Shanghai’s first high school basketball league called the Nike League, and sponsored basketball tournaments in cities across the country. After 26 years operating in China, Nike finally recorded $1 billion in revenue, and by 2010 this figure had doubled to 2.06 billion. Now with over 30 years of operating experience on the ground, the Nike marketing machine continues to thrive in China where it plans to double its sales by 2015.
Challenge:
Through successful sponsorship of prominent athletes in China, like Olympic gold-medalist Liu Xiang and famous NBA stars, the Nike brand appealed to the male demographic in China. However, Nike aimed to further open the market for women’s athletic shoes and apparel.
Solution:
Nike created a commercial featuring tennis stars Maria Sharapova and Li Na. During the commercial Nike had the two professional female athletes share their dreams, and what they were willing to do to achieve them. Nike then partnered with Chinese online video portal Tudou to create a specialized campaign bringing together 50 female college students to create original video segments to share their own dreams. During the video segments the young women shared their goals of becoming professional basketball stars, yoga instructors, dancers – all while wearing the latest Nike sneakers and athletic apparel.
Result:
The “Fuel for Dreams” campaign successfully raised Nike’s profile among the young female demographic. The Nike Women page on Tudou received over two million page views from over one million unique visitors. More importantly the page received nearly 700,000 comments full of valuable consumer insights. The partnership with Tudou enabled Nike to reach its target demographic by hosting its content in an online environment where they were already comfortable.
The China Observer View:
Companies expanding into China for the first time (or entering third and fourth tier cities for the first time) often find themselves creating markets for products that never before existed. In such situations education is essential to create a need in the marketplace. China has a vibrant online community where netizens engage in rich dialogue on message boards, micro-blogs and on social platforms like Tudou. This presents a unique opportunity for marketers to take part in a two-way exchange about the wants and needs of their customers. Structuring a campaign like Nike’s will not only lead to increased brand recognition in the short-term, but allow companies an additional channel to collect valuable product feedback to fuel innovation over the long-term.
Linda Kozlowski heads marketing and customer experience globally for Alibaba.com the world’s leading business-to-business (B2B) e-commerce platform. Alibaba.com is headquartered in Hangzhou, China with operations in more than 240 countries and 23 million users worldwide. I asked Linda what are the top e-commerce trends we should watch in 2012. The following is her response:
“E-commerce is booming in China, but I believe we are about to see even more dramatic growth in the sector this year. There are already about 500 million Internet users there, according to a 2011 CNNIC report, this represents about 37.7% of China’s population. Alibaba.com has been at the forefront of building trust in online commerce in China, through safe payment and shipping arrangements. Now we are seeing real momentum building as online shopping is boosted by people’s use of social media and mobile phones. Chinese consumers are very keen to read and write online reviews of products and shopping experiences – much more keen than US consumers – and this encourages others to engage in online shopping. In the US, though, I do think we will increasingly see social media driving e-commerce acceptance and usage.
Globally, it will be interesting to see how traditional businesses can better leverage e-commerce. For example, in the UK, Domino’s Pizza frequently takes online orders worth more than £1m during the course of a single day – with almost 13% of this coming from mobile devices. As the penetration of mobile devices continues to accelerate, the time is now right for companies to really start using e-commerce to make life easier for consumers.
Finally I think we are entering an era of greater cooperation between companies, fueled by e-commerce. Even small companies will increasingly be able to combine products, or products and services, and pool marketing resources to win more sales in a more competitive online world. This is going to require a new level of trust and understanding between what may even be traditional competitors and so the right environment – the right marketplace – is crucial.”
Updated 1/11/2012
The Armani Group designs, manufactures, distributes and retails lifestyle and fashion products around the world. Armani first entered China with its 1,100 square meter Shanghai flagship store in 2004, and has since opened boutiques in more than 40 major Chinese cities. Like many western multinational companies, Armani plans to expand aggressively in China in the coming years where it aims to open at least 35 new sales outlets annually. Given that China should become the world’s largest luxury market by 2015, Armani seems to have picked the right country to place its international investments.
Challenge:
Armani’s China retail model combines third-party resellers with direct stores totaling over 180 points of sales nationwide. While there are high concentrations of luxury consumers in urban centers like Shanghai and Beijing, it takes time to build brick and mortar boutiques to meet the needs of China’s luxury consumers who reside in second and third tier cities. Given the limitations on expansion, Armani was missing out on an opportunity to reach potential customers beyond the scope of their existing operations.
Solution:
Chinese luxury consumers are, on average, relatively younger than their counterparts in developed countries. Forty-five percent of Chinese luxury consumers are between the ages of 18 and 34 years old. Additionally, China is home to the world’s largest Internet population with 200 million online shoppers who spent 750 billion RMB online in 2011. Armani found that opening an online store would tap into both of these trends and enable it to expand its reach into third and forth tier cities where it could connect with young technology savvy luxury consumers. Armani partnered with YOOX.com, a global operator of luxury e-commerce websites, to build an online storefront tailored specifically for Chinese consumers at Emporioarmani.cn.
Result:
Through Armani’s partnership with YOOX, the Italian luxury group expanded its reach in mainland China. Its online storefront provided an Armani retail experience to potential customers regardless of whether they were located in Beijing, Harbin or Urumqi. By understanding the dynamics of the Chinese market, Armani developed a solution that enabled it to effectively scale its operations online, while its brick and mortar operations caught up offline.
The China Observer View:
Building effective distribution networks and managing channel partners are top of mind issues for western multinational companies operating in China. As a result, partnering with third party distributors is almost unavoidable. However, progressive companies should consider e-commerce solutions to expand their reach and mitigate the risks associated with partnering with several different distributors across the country.
Female consumers in China have an incredible amount of influence over their family’s purchasing decisions – especially when compared to that of women in previous generations. Modern women in China’s urban centers possess relatively high levels of education, work white-collar jobs, and contribute substantial earnings to their household.
As a result, Chinese women help determine what products and services their family purchases with their discretionary income. According to Nielsen’s 2011 Global Women Consumer Study, Chinese women are more inclined to save for their children’s education relative to their counterparts in developed nations (48% versus 16%). Additionally, the top three categories women in China spend money on are ‘daily necessities,’ ‘clothing,’ and ‘health and beauty products’ while women in developed markets choose to spend their money on vacations and paying off debts and credit card bills.
For a complete breakdown of how Chinese women spend their discretionary income, please refer to the chart below:
