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Chinese Consumer Report 2010 by Roland Berger Strategy Consultants: The Internet is increasingly shaping Chinese consumer behavior

Shanghai/Munich, July 27, 2010

  • 12,000 interviews conducted
  • Chinese consumers are growing increasingly sophisticated and individualistic
  • 84% of car consumers identify quality as the main reason for purchasing imports
  • Internet Word of Mouth (IWOM), is especially powerful in China

Preferences and behavior of Chinese consumers are becoming more sophisticated. Non-price factors such as brand are increasingly important in making a purchase, and consumers are drawn toward brands by high quality, import products, good service and value for money. In addition, consumers' growing individualism is reflected in their buying choices as they seek to stand out from the crowd. These are some of the findings of the new Chinese Consumer Report 2010 entitled "Brands and Buzz: Understanding How to Reach Today's Chinese Consumers."

"Approaching China as a homogenous mass market is a thing of the past," says Charles-Edouard Bouée, President & Managing Partner Greater China with Roland Berger Strategy Consultants. "We have witnessed that Chinese consumers are growing increasingly sophisticated and individualistic." Consumers are becoming more diverse through their differences in values. The younger generation and middle income people often seek brands associated with fun and excitement, and they care more about product design. Older people and higher earners, on the other hand, look more at efficiency and performance when they buy certain consumer goods. Price, once the determining factor in a purchasing decision, is now just one of several factors alongside brand, quality and personal style. These are some of the key findings of the new Chinese Consumer Report 2010 entitled "Brands and Buzz: Understanding How to Reach Today's Chinese Consumers".

Brand is the most important factor when making a purchase

In specific industries like automotive, brand is the frontrunner in determining a purchase for both imported and domestic cars. Quality awareness is also increasing among Chinese consumers, especially in the wake of quality defects that have been seen as threats to public health and safety. 84% of car consumers in China, for example, identified quality as the main reason for buying imported cars. Value for money is another important component of brands. While price in itself is not the main factor, customers still want to get the most out of their purchase. However, 74% are willing to pay more for the sake of quality and 82% for good service.

Personal style and fashion are becoming more and more important

Chinese consumers are placing more emphasis on personal style. They are focusing on the latest fashions and are becoming more individualistic. More consumers are staying up-to-date on trends, and roughly half consider a product's style to be more important than the function. According to the study, more than a quarter of consumers across all cities purchase new phones simply because they feel their current phone is not in style anymore. The average cell phone purchasing frequency in China, about one phone every 1.5 years, is on par with mature markets.

China's Internet user population is growing

"Companies can best engage with consumers online by following basic principles of respect and transparency and by adding value to online discussions about products," says Bouée. China's Internet user population has seen explosive growth over the past decade, reaching 384 million users in 2009, up from around 23 million in 2000. The growing volume of online chatter generated by Internet users, also known as Internet Word of Mouth (IWOM), is especially powerful in China.
It is worth noting that in China, brand awareness and purchasing decision are the stages most influenced by IWOM, with 56.3% of consumers first learning about a brand through IWOM and 58.7% deciding to purchase based on IWOM.

More and more Chinese consumers are using online channels

Chinese consumers are not only generating and studying IWOM about products, but increasingly using online channels to make purchases. The amount of online shopping transactions has grown at an average annual rate of over 100% in the past several years. While e-commerce in China is still low in absolute terms compared with online shopping in the US, the former is growing five times faster than the latter, and high growth is expected to continue, particularly as online payment mechanisms and security improve. Effectively managing online communication with customers has significant implications for companies' resource planning and marketing organizational structures. The quality and professionalism of staff who interact online is a priority for many companies given the potential for both improvement and damage to the brand. "By keeping track of users' preferences for interaction with companies and for promotional activities, marketers can tailor their efforts to reach consumers more effectively and enhance their brand image," says Roland Berger expert Bouée.

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