Riding on emotions

Updated: 2016-04-08 08:19

By Andrew Moody(China Daily Europe)

  Comments() Print Mail Large Medium  Small

Riding on emotions

Consumers at Lancome's counter at a shopping center in Nanjing, Jiangsu province. [Photo provided to China Daily]

The Chinese, who normally drink domestic lagers such as Tsingtao and Yanjing, had suddenly developed a taste for English bitter ale.

The brewer that makes the beer based in Bury St Edmunds, Suffolk was the latest to benefit from the desire of Chinese consumers to have the latest thing.

This often emotional and sometimes erratic behavior is "shaking the world", according to a recent article by Jeffrey Towson, professor of investment at Peking University's Guanghua School of Management, that went viral.

Chinese consumers are a vital market for virtually all leading global consumer brands, yet their behavior is so volatile that trends are becoming increasingly difficult to forecast.

They do not often behave according to the more established and standard patterns of behavior they see in Western markets, according to experts.

So foreign multinationals - like Chinese companies that are just as desperate to capture their own domestic market - are having to adjust their business models so they can align them with the latest trends and fashions in the world's second-largest economy.

Riding on emotions

There was much interest last month therefore in the publication of the 2016 China Consumer Report, The Modernization of the Chinese Consumer, by McKinsey & Co.

It was the 11th such report produced by the international management consultants since 2005, and this year included interviews with 10,000 consumers.

Daniel Zipser, partner at McKinsey's Shanghai office and the leader of its consumer and retail practice in Greater China, who was co-author of the report, says it is the speed of the consumer trends that presents the biggest challenge to companies.

"You see brands emerging from nowhere to be worth a billion dollars in just 12 to 18 months. We just haven't seen that in the Western world," he says.

Despite the recent slowdown in the economy, Chinese consumers remain among the most confident in the world.

Those expecting their household income to increase significantly over the next five years was 55 percent in 2015, barely unchanged from the 57 percent in 2012.

This contrasts with only 30 percent of British consumers and 32 percent US consumers, believing the same when they were last polled in 2011.

"Although there are regional differences with consumer confidence in Northeast China (an area of declining heavy industries and higher unemployment) dropping to UK and US levels, China is still a nation of more optimistic consumers," adds Zipser.

With this level of buoyancy, China - and not the United States or Europe - has become the place for companies to launch new products and services.

In February, Apple chose China to be the first country outside of the US to launch its Apple Pay mobile payments system, linking with Union Pay and Chinese banks.

It also had a simultaneous California and Beijing launch for the iPhone 5 in 2013.