Taking China's measure

China is the latest ‘buzz’ word. Small wonder, it’s tipped to become the world’s largest economy by 2016 and to overtake the US by 2041. So when this year’s Marketing Forum offered the opportunity to listen to Dr Linda Yueh, a lecturer from the Department of Economics at the LSE on the topic, it was a case of standing room only.

So what makes it relevant to researchers? It’s probably more a case of why it’s proving fascinating to marketers. Dr Yueh’s session offered the chance to investigate the traits of the emerging middle class and their consumption patterns.

She also talked us through the strategies of various Chinese firms — plus multinationals that are already in China — to assess their current push for marketing Chinese brands domestically and in global markets. It is a market where consumers are getting used to having money in their pockets. After decades of scrimping and saving, China’s GDP growth has averaged 9% per annum for the past 25 years, with real income per capita rising by over 6% over the same period. This makes it the world’s second largest exporter and importer.

There is now an emerging middle class whose real purchasing power has risen with economic growth. This has led to a growing demand for durable goods, with consumers keen on items such as automobiles and home electronics.

Other areas have not proved as popular, with brown goods — like small electronics — experiencing a slackening of demand but specific sectors, Dr Yueh said, are picking up.

Perhaps the most vivid of her descriptions concerned the attitude of the Chinese Government towards consumerism. It is keen to see more spending in the shops so, when a national holiday occurs, it spends heavily on advertising, exhorting its citizens to: “Go on a shopping spree! It’s a holiday!” So where does research comes into the picture? Well, according to Dr Yueh, a growing number of firms are undertaking qualitative research. “This is particularly true since there is an increasing push among Chinese firms to increase their brand awareness and cater to the growing segment of the market, the ‘new middle class’ in China,” she says.

Such households are still limited to the number of offspring they can introduce — one — but less so on what they can buy. Now, says Dr Yueh, “There is much pent up demand in China after decades of limitations on what they can spend on and what was available to purchase.

“Liberalisation has made more choice available for goods ranging from mobile phone to home improvement. Chinese consumers, meanwhile, are as savvy and discriminating as those in other parts of the world.” Marketers are aware that there is all to play for. In addition to rising household incomes there is a growing demand for housing, DIY and home mortgages given the housing market liberalisation of the late 1990s. As for the ‘new middle class’, it has made China into the third largest new car market at the present time.