I spent this past weekend writing an in-depth post about Yum! Brands influence and operating model in China. I was just about to publish it, when I came across this fantastic interview from Tom Doctoroff. The interview originally appeared in the Chamber Eye, the magazine of the British Chamber of Commerce in China, and was republished in The Huffington Post.
Doctoroff answers the following questions:
· How would you define the Chinese Middle Class, who are they, where are they and when did they emerge?
· How is the Middle Class growing in China and where is growth strongest?
· How do the Chinese Middle Classes view themselves?
· What are the challenges facing the Chinese Middle Classes?
· How are the Chinese Middle Classes evolving?
· What are the aspirations of the Chinese Middle Classes, what do they want?
· How does the State view the Middle Classes and how is the State providing for them, are they hindering or helping them?
· Is there a difference in how Middle Classes live at home and in Public and if so, why?
· What products and services do the Middles Classes aspire to have? Growth in home ownership, DIY, car ownership etc
How can companies reach out to the Chinese Middle Classes and connect with them? Examples of successes and failures?
“Success in China is rooted in having insights that uncover fundamental motivations and bringing your product in alignment with these. Every product that charges a premium needs to be a tool for social advancement.
Examples of success would be De Beers diamonds, in ten years of entering the market, the penetration of diamond engagement rings has gone from 8% to 80%. They were able to do this by understanding the motivations; marriage in China is different then it is in the west, in the west we like to believe that passion and romance will last forever, in China, however, it is commitment that lasts forever, not love as such. De Beers sold themselves as giving the Chinese man a tool to demonstrate his reliability.
Ford is another example that is doing better than everyone expected. It does not sell itself on how good it is to drive its cars, but by how they can transform people’s lives. Of course it depends on the model and which societal class you belong to, but fundamentally the allure is how the cars will help you to advance up the hierarchy in some shape or form, this in fact is why China has overtaken the US in the growth of automobile ownership, not because the Chinese need cars, but because it’s a threshold of middle classness – companies who want to succeed in China need to bring their products in line with the Chinese world view and structure of Chinese society.
Rejoice Shampoo, from P&G, has also done a very good job at maintaining its position within the market, it has done this through its ‘confidence through softness’ advertising, i.e. that the beauty of your hair will be noticed by other people.
Häagen-Dazs moved to outdoor consumption as they knew this was the only way to get people to pay the premium on their ice cream, it’s a great way for a boy to impress a girl by taking her to eat at such an exclusively expensive indulgent venue. Starbucks is doing much the same thing.
In China the product is a means to an end, the message driver has to be that this product will make you noticed and help you on your journey upwards.
The Chinese have no excuse to be buying luxury goods, given their level of income, but luxury is so externalised it enables inconspicuously conspicuous consumption, i.e. to show off without being seen to do so. There is a craftsmanship to selling products in China, it’s communicating how your product will help the owner solidify their status, but avoiding clichés.”
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