Consumers in China evolving from price-driven to value-driven shoppers


August 21, 2013 | By RetailME Bureau

A report jointly released by The American Chamber of Commerce in Shanghai (AmCham Shanghai) and Booz & Company about consumer market strategies in China indicates that Chinese consumers are increasingly opting for quality goods at higher prices and adopting online shopping and social media to gather product information – two key trends driving company strategy in China.

The 2013 China Consumer Market Strategies report based on a survey of nearly 90 Chinese and multinational companies (MNCs), measured how companies rank 7 major trends by importance and the approaches they take to respond to them. This year’s survey also included a section aimed at evaluating companies’ digital capabilities.

Companies ranked the evolution of consumers – from price-driven purchasers to value-driven consumers – as the top trend driving their China market strategy. Chinese consumers, particularly in Tier-1 and Tier-2 cities are seeking greater reliability, consistency and integrity in consumer products.

With the rise of e-commerce and social media, the 2nd most important trend identified in the report, both multinational and Chinese companies reported that they recognise the importance of developing digital marketing and sales channels. However, the majority of companies declared that they are not yet adequately prepared to convert growing online interactions to a sales advantage.

In contrast, the report noted that leaders in this area demonstrate an ability to make strategic use of data derived from online viewing and purchasing habits, and to align digital activities with their corporate strategies and across organizational functions.

“The report highlights that the use of mobile devices, online shopping and social media is a disruptive business trend. Companies must develop targeted strategies and China-specific capabilities that enable them to respond and beat out competition,” says Robert Theleen, Chair of AmCham Shanghai.

“In China, consumers leapfrog their counterparts in other markets by adopting technologies to gain bargaining power. They are sophisticated in using social networking platforms to form alliances with like-minded consumers, which would be hardly possible in developed markets. Companies have to stay vigilant to the power of the online activities, with opportunities for online engagement to enhance or harm a brand,” adds Theleen.

“As China’s consumer market matures, Chinese consumers in developed cities and regions continue to trade up in their purchasing choices. This presents companies with opportunities to build products and brands that could deliver great value. However, to capitalise on this trend, companies will need to strengthen their capabilities in innovation and branding,” says Adam Xu, director for consumer & retail practice at Booz & Company.

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