Tom Doctoroff is a China observer who I have a tremendous amount of respect for. His insights into the Chinese consumer market are astute and always based on sound analysis. In his recently released book, What Chinese Want, Doctoroff shares his perspectives on Chinese consumers from working in Asia for well over a decade – most recently as Greater China CEO for J. Walter Thompson (JWT). I caught up with Doctoroff between his recent trip to Japan and an upcoming teaching session at Chicago Booth’s Global Launchpad in Beijing.
What are the main differences between your recently released book, What Chinese Want and your earlier work Billions: Selling to the New Chinese Consumer?
My first book, was more of a “how to” guide on marketing in China. Sequentially, I addressed several consumer segments – the middle class, the mass market, men, women and youth – and analyzed their buying instincts based on insights particularly to those segments.
I think What Chinese Want is a broader book, perhaps a more ambitious one. I start with a fairly long chapter on the Chinese “worldview” (“Old Pipes, New Palace”) as a framing device for the entire book. I argue that Chinese society has always been and will continue to be characterized by a unifying “Confucian conflict” between ambition and regimentation, standing out and fitting in, projection of status and protection of economic interests. In this chapter I outline “timeless” characteristics of Chinese culture as well as enduring strengths and weaknesses. In subsequent chapters, I interpret these characteristics across four “domains” of contemporary culture that include business, consumerism, social structures and engagement with the world. At the same time, I hope to reconcile the most modern and dynamic elements in China, from digital behavior to luxury fixation to the PRC’s relationship with America, with enduring cultural imperatives. I believe Chinese society is becoming modern and internationalized but not Western. Much of What Chinese Want focuses on how Western influences – for example, Christmas and diamond engagement rings — are transformed into vessels of Chinese culture as status projectors in a society in which self-driven individualism remains a tempting but dangerous aspiration and individuals do not define themselves independent of their responsibilities and obligations to others.
Billions was generally well received but some felt I presented Chinese consumers as too traditional rather than constantly evolving. This time around, I endeavored to paint a picture of a modern Middle Kingdom, not stuck in the past but still very much engaged with foreign institutions as a means of strengthening their own domestic circumstances.
What are your thought on the relationship between product positioning and individualism in China?
On the multinational client front, both Starbucks and Haagen Dazs have reconfigured their business model to conform to Chinese business imperatives. In China, the “golden rule” of marketing is: maximizing public consumption can increase price premiums and profit margins. The Chinese will invest in anything that provides “face” — that is, external endorsement that leads to professional or personal advancement. This is not just a question of relevant insight or positioning. Starbucks will soon operate 1,500 outlets on the mainland. The company has established its stores as gathering spots for groups of aspiring professionals. It has reconfigured design, broadened menu options, developed an extensive array of “badged accessories,” and leveraged social media - all this in a “tea culture” country.
Haagen Dazs also maximizes public consumption. Consumers will not eat expensive ice cream at home. Like Starbucks, its business model focuses on driving traffic through stores, parlors that sport a romantic vibe and new generation cool. P&G brands are impressive for consistent ownership of the category benefits. Additionally, General Motors has leveraged skill portfolio management across vehicles, particularly Buick, as men progress on a “journey of success.”
Local companies have also made progress, although none are actively preferred relative to MNC brands. More maintain consistent positioning. Anta, a sports shoes and apparel manufacturer, defines mass market sporting spirit. VANCL, a fashion brand, fuses digital self-expression with e-commerce innovation. But Chinese and international brands still have fundamentally different strengths and weaknesses. Mainland companies know how to “manage scale” across immense swathes of time and space. They are “frugal innovators.” Their products are available to hundreds of millions of Chinese, right down to the rural fringe. In this respect, Lenovo, China Mobile, China Unicom, Haier (appliances), Yili (dairy) and Qingdao (beer) have been impressive.
As Chinese consumers become wealthier, they become more modern and international. But, digital liberation notwithstanding, they are not becoming Western. The Chinese worldview remains anti-individualistic, if we define “individualism” as societal encouragement of individuals to define themselves independent of external expectations. China remains a Confucian society driven by a complex code of obligations, centered on twin pillars of family and nation. At its core, Chinese society is characterized by tension between ambition and regimentation, the urge to advance while conforming to imperatives imposed by the “system.” Egos are huge — success is impossible without “face”— but outright rebellion is forbidden.
The motivations that fuel the most dynamic categories remain profoundly Chinese. And brands are always tools of advancement and benefits are always externalized. Sports cars will always be niche because their benefits — “zoom, zoom,” the thrill of motion — are largely “internalized.” “Power” must morph into status projection because autos, like practically all brands, are weapons of professional advancement on the business battlefield. Chinese tourists are more interested in purchasing luxury goods or “collecting” destinations for show off purposes back home than experiencing other cultures. Of course, as consumers become more sophisticated, positioning strategies must become more artful, less one-dimensional. The man on top demonstrates mastery or connoisseurship, not his bank account. But, young or old, rich or poor, all benefits are a means to an end – that is, climbing a hierarchy of success. Brands should, directly or indirectly, enhance social standing. Budweiser’s “What’s Up” campaign, a celebration of male bonding, would never work. In China, premium beer lubricates trust between guys who want to make money.
Come back next week for Part II of the interview…