The emerging middle class is the starting point for many discussions on China’s economy and society. But who are these people that, as Professor Luigi Tomba puts it, are “going to be at the epicenter of every social change that is going to happen” in China? And more importantly, where do they come from? The terms applied to them are misleading. Locally they are something of an economic elite, and even so have not reached the wealth of their supposed Western counterparts – in other words, they are not the “middle” of anything. They are also far from uniform.
As a seller, you may often encounter a situation like this: your customers gather and discuss the product they want to buy and one day they come to you and form a group, bargaining. As a result, you have to offer them discounts and other benefits. Harvard economist Michael Porter formalized this idea, called “buyer power,” in 1979. “Buyer power” is separate from the competition that you face and you should be careful to distinguish the two. Even if you face little competition, if your buyers are powerful then you are in trouble. Read our article to find out a solution.
China’s apparel market is now one of the fastest growing markets in the world. Euromonitor statistics show many foreign brands doing well: Uniqlo currently holds 1.6% of the market for specialist apparel; and Danish company Bestseller Fashion Group China, which operates brands like Only, Jack & Jones and Vero Moda, is holding 2.3% of the market share. Where are the local apparel brands? VANCL, a Chinese ecommerce clothes retailer, is almost a forgotten name. It used to have a 4.5% market share in 2011, but its dream of IPO lie in ashes—how did the once mighty retailer become China’s diaosi (loser) brand?
Chinese consumers have changed faster than consumers in probably any other market. Increasing exposure to international media and social media is changing the expectations of Chinese consumers. On top of that, the broad economic slowdown and brand saturation in China has ratcheted up competition to new levels as the days of easy money disappear. For both multinationals and Chinese companies, the changing market dynamics present challenges they have never seen before. In this interview, Torben Pheiffer, Managing Director of SapientNitro, China, explains how companies need to adapt their branding strategies.
In recent years, globalization has lifted billions of people out of poverty and created vast wealth, but has also spawned hyper-competitive markets that make a secure niche ever more difficult to find. Everyone from cabbies to multinational businesses find it’s harder and harder to maintain an edge. Meanwhile, in the world’s younger economies, particularly China, companies face another challenge: unlike Westerners who grew up loyal to particular brands, Chinese consumers did not have that; and as markets consolidate, consumers are selecting a few favorites. So how should companies deal with these new trends?
Doing business in China has never been easy for foreign-owned companies, but Uber has largely managed to avoid conflict by operating as a separate Chinese subsidiary, Uber China, on the mainland. However, Uber China still faces many challenges: competing with Didi, not being profitable, and even worse, its business has always been riding on a government regulation fence. In a market that is as challenging, and competitive as China’s, the answer to winning over China’s smartphone users lies deeper than just competitive pricing or partnerships.
With humble beginnings in Hangzhou, Jack Ma went on to create an e-commerce titan that has grabbed the attention of China and the world. Today Jack Ma and Alibaba’s story has become the stuff that legends are made of. Duncan Clark has witnessed firsthand Jack Ma’s dizzying rise in China’s e-commerce firmament. A former investment banker at Morgan Stanley, Clark first got to know Jack Ma in 1999 when he met him in the small Hangzhou apartment where Ma and his friends famously founded Alibaba. In this interview, Clark, also the author of Alibaba, the House that Jack Ma Built, talks about Alibaba’s incredible story and its impact on China.
Xiaomi, once the most popular smartphone vendor in China, is showing signs of decline. Back in the day, Xiaomi broke the mold by offering a feature-rich phone at an impossibly low price point. Its unique marketing strategy and business model helped it to break online sales records. But soon others started copying Xiaomi’s strategy and the novelty wore off. The company has been slow to innovate. For phone buyers, Xiaomi ended up being a low-end phone: once they had enough money, they would upgrade to an Apple or Samsung. Today Xiaomi is quickly diversifying from phones to rice cookers and drones. But is that enough to come back to relevance?
The Summer 2016 issue of CKGSB Knowledge is out! It has articles and interviews like: COVER STORY: Wanted: A Miracle: Buffeted by economic forces, does China still have the wherewithal to face strong winds? CHINA DATA: From stats on wind power to McDonald’s restaurant openings, the numbers you need to know SNAPSHOT: Out to the world: More Chinese students are studying […]
Just how much time and energy would you spend pondering over which dustbin to buy next? Chances are, not a lot. But for some consumers in China, even seemingly mundane things like trashcans have started to become significant from a social status point of view. More and more Chinese consumers are shifting their consumption of even routine everyday things to more premium categories. They are often influenced by their own experiences or those of their peers, travels abroad, foreign movies or social media. But increasingly now there are a whole host of services that are geared towards exposing Chinese people to newer things—and making them buy.