Table Of ContentThe Chinese Consumer Market:
Opportunities and Risks
CHANDOS
ASIANSTUDIESSERIES:
CONTEMPORARYISSUESANDTRENDS
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The Chinese Consumer
Market: Opportunities
and Risks
L T
EI ANG
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First published in 2009
ISBN:
978 1 84334 332 5
© L. Tang, 2009
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About the author
Dr. Lei Tang was born and brought up in China. After having received
the bachelors degree in China, she moved to France.
She received the Ph.D. degree in science management from an accredited
French public institution, Institut National des Télécommunications
(www.int-evry.fr). Currently, she is working as an assistant professor in
marketing and strategy department of a school of business in France.
Her education and research interests straddle between marketing man-
agement and telecom engineering, making marketing principles accessi-
ble to engineering and reaching out to practitioners in the chosen appli-
cation fields.
Her current research goals mainly focus on Technology adoption and
Innovation diffusion from an international comparative perspective –
consumer behaviour with its technological, intercultural, anthropologi-
cal and sociological aspects – that is mostly business-based. Her future
work seeks to develop MVNO business models, mobile advertising,
mobile payment and other killer mobile applications. Her interest in
Chinese business (domestic and international) is attributed to her
Chinese origin. She has undertaken consultancy work and research
projects for many companies.
The author may be contacted via the publishers.
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11
Chinese consumer trends
Introduction
The Chinese consumer market is huge and offers enormous potential
opportunities. China has been the world’s leading producer of many
industrial materials such as steel, copper, aluminium, cement and coal for
several years. As a resource consumer, China surpassed Japan as the
globe’s second largest importer of petroleum in 2005 and as the world’s
second largest auto market in 2006, with total sales of 7.2 million vehi-
cles and a production level of 7.3 million. In 2007, China also became the
world’s top producer of merchant ships. Simply phrased, China is an
economic superpower.
China’s rise as an economic superpower is likely to pose both opportu-
nities and challenges for the world trading system. The rapid increase in
consumer income is making China a huge market for a variety of goods
and services, and its abundant low-cost labour is leading multinational
corporations to shift their export-oriented, labour-intensive manufac-
turing facilities to the country. Meanwhile, developed and developing
nations are concerned that China’s FDI is coming at the expense of FDI
in their own countries and that they have not only lost domestic manu-
facturing jobs to China, but also have to face the economic pressures of
pitting their products against cheaper Chinese products.
Chinese consumers are in the midst of an economic boom and a
lifestyle revolution. The Chinese have emerged from prolonged global
isolation and lack of consumer choice to becoming the world’s fastest
growing economy. From affluent urban youths to mobile professionals to
the rural elite, consumers are hungry for creative products and services to
satisfy their emotional, intellectual and social needs (Figure 1.1).
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The Chinese Consumer Market
Figure 1.1 Consumer price index in China
140
120
100
80
60
40
20
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Source:China Statistical Yearbook, 2007.
Several things will, or may, happen in the near future that will hasten
the development of this huge consumer market. These include increased
foreign interest in China’s retail sector; possible revaluation of the
Chinese currency; the Chinese government’s efforts to shift the sources of
economic growth from investment and exports towards consumer spend-
ing and the accelerated reform of China’s banking system, which will re-
sult in a bigger and more efficient market for consumer credit.
In China, consumption is currently only 50 per cent of its gross domes-
tic product (GDP), which is way below the 65 per cent norm in most
major economies. Put another way, 20 per cent of the world’s population
accounts for only about 3 per cent of total global consumption. The po-
tential of the Chinese consumer could well be one of the greatest oppor-
tunities for the global economy in the 21st century.
When doing business in China, it is important to understand tradi-
tional Chinese culture and consumption behaviour.
Chinese traditional culture and its values
Culture is of critical relevance to marketers in China because successful
strategies cannot be developed without taking into account the specific
features of the regional culture. Relationships and group orientation are
deeply rooted in the culture that permeates all aspects of Chinese society.
Confucianism, Taoism and Buddhism have shaped Chinese traditional
cultures (Zheng, 1997), as these three doctrines were an important part
of daily life in old China and are so even today.
2
Chinese consumer trends
Confucianism and its core beliefs
Confucianism, which developed from the teachings of Confucius or
Kung-fu-tzu, was the most influential Chinese religion. It was the state
religion from the start of the Han Dynasty in 202 BC to the end of the im-
perial epoch in 1911. Confucius, a Chinese scholar and political figure,
lived during feudal times (over 2,000 years ago). He established an ethi-
cal and moral system that governs all relationships: father and son, ruler
and ruled, husband and wife, elder brother and younger brother and
between friends.
Confucianism views the family as the basic unit of society. Certain re-
ciprocal relationships and responsibilities must be observed to preserve
harmony. A specific hierarchy is pragmatic, and Confucianism places the
greatest importance on rank and age in all interactions. Saving face and
not causing shame to another are important. Since the family is the core
unit, all the actions of an individual reflect on the family when the virtues
of kindness, righteousness, propriety, intelligence and faithfulness are
practised (Table 1.1).
Confucianism is the philosophy of living rather than a religion and
may guide one’s life while one practices other religions, such as Taoism
and Buddhism, without contradiction.
Table 1.1 Confucianism and core beliefs
Confucian doctrine Essential beliefs
Five ethical elements The relationships between father and son; ruler
and ruled; husband and wife; elder brother and
younger brother; and friends.
Six virtues of humanity Ren: benevolence,humaneness toward others –
the highest Confucian virtue
Li: includes ritual,propriety,etiquette,etc.
Xiao: love within the family: love of parents for
their children and of children for their parents
Yi: righteousness
Xin: honesty and trustworthiness
Cheng: loyalty to the state,etc.
Sacred texts The Si Shuor Four Books
The Wu Jingor Five Classics
3
The Chinese Consumer Market
Table 1.2 The way of Taoism
Way: Tao
c
One: Universal principle
c
Two: Ying,yang
c
Three: Yin,yang,their unity
c
Myriad creatures
Taoism
Taoism is the most important strain of Chinese thought after Con-
fucianism through the ages. Although almost entirely different from
Confucianism, it is not contradictory. The Tao does not concern with
affairs of the state, mundane or quotidian matters of administration, or
elaborate rituals; rather, it encourages avoiding public duty to search for
a vision of the transcendental world of the spirit (Table 1.2).
Taoism is based on the idea that behind all material things and all the
change in the world lies one fundamental, universal principle: the way of
Tao, which is the interplay between five elements (i.e. metal, wood,
water, fire and earth), and the interdependence between the macrocosm
and the microcosm (e.g. man’s relation to the universe). This principle
gives rise to all existence and governs everything – all change and all life.
The purpose of human beings is then to live life according to the Tao,
which requires passivity, calmness and non-strife, known by Taoists as
‘Wu Wei’ (Table 1.3).
When Yin and Yang embrace each other, they reveal that they are not
a world that can be divided into black and white, but black inwhite and
white inblack, forming a unity (Figure 1.2).
Taoism is not a religion; it is a philosophy – a way of looking at life and
a way of thinking about things. Taoists believe that if one looks at life and
thinks about things in the right way, then one will be much happier.
4
Chinese consumer trends
Table 1.3 Taoism and core beliefs
Taoism doctrine Core beliefs
Eternality The ineffable,eternal,creative reality is the
source and end of all things.
Principle of Wu Wei The Taoist prefers a life of total inactivity. It is
rather a life of no purposeful action.
Moral wisdom ‘Manifest the simple’,‘embrace the primitive,
reduce selfishness,have few desires’.
Harmony between human The Tao is in harmony with one’s original
beings and nature nature. An individual in harmony with the Tao
comprehends the course of nature’s constant
change and does not fear the rhythm of life and
death.
Immortality Achieving immortality: dietary regimens,breath
control and meditation,sexual disciplines,
alchemy,the use of magical talismans and the
search for healthy,vitality,long life,etc.
Sacred Texts Tao-De-Ging(The Way of Power)
Buddhism
Buddhism, though introduced to China from India between 58 and 76 AD,
began to flourish only in the third century. It evolved around the teach-
ings of Siddhartha Gautama, or Buddha, a contemporary of Confucius.
Figure 1.2 Yin: dark,moist,feminine and Yang: bright,dry,
masculine
5
