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Buying tendencies and preferences of the Chinese consumer

In the autumn of 2002, Asia Market Intelligence (AMI) in Hong Kong conducted a study about the buying tendencies of the Chinese consumer. Face to face interviews with 1,023 top management executives and entrepreneurs were conducted which covered a full range of industries. Some results of that study are useful in assessing the China market:

• 89% feel it is critical for multinational companies to operate in China.

• 92% strongly agree that it is important to have an international perspective.

• 51% carefully compare prices before buying.

• 54% believe more in products recommended by experts.

• 41% speak English in business.

• 61% believe China’s entry in the WTO will have afavorable impact on their company.

Information regarding employee Internet sophistication (use and attitudes toward use) was also gathered:

• 68% agree that their company needs to be proactive towards the Internet and online business.

• 78% agree that being able to conduct business online is a significant competitive advantage.

• 63% claim that online business will increase competition in their industry within the next 2 years.

Clearly, there is strong evidence that marketing appropriately in China can appeal to a ready and willing audience. Learning about the Chinese and their culture will improve the possibilities of success.

Doing business with Chinese consumers

Western ways and cultural influences are found worldwide, and have caused some alteration in behavior throughout the world; the Asian countries are no exception. While some ‘old ways’ and customs may have given way to Western-appearing behavior to some degree, the underlying culture remains. In fact, the perception that Western ways are understood and prevail in social and business interactions, may lead to greater misunderstandings.

The size, diversity, multi-ethnic make-up and unequal economic development of the populations of China mean that an understanding of cultural and ethnic ways is particularly important. Portions of China—the large commercial centers (Beijing, Shanghai, Guangzhou)—will have more exposure to Western approaches to business and at least some exposure to the cultural differences that exist between the East and West. Those compelling markets in the inland regions may not be as likely to have this level of sophistication. The information that follows is provided to help ensure the smooth and successful launch of business in China.

In general:

• Speak distinctly and avoid colloquialisms and vernacular.

• Disagree agreeably. The Chinese are not likely to give direct answers if they could cause discomfort: "yes"’may not mean "yes", but signal understanding, or that you have been heard. "No", and direct negative statements will not be heard at all. It is advisable that visitors avoid any direct negatives, as well.

• The Chinese are polite and avoid offense to others as much as possible. The "saving of face" is important in the culture.

• Say "thank you": Mandarin: shay-shay. Cantonese: doe-jay

• Tipping has long been considered an insult in China, but times are changing, so ask for guidance.

• Avoid discussing Taiwan, criticism of the Chinese leadership, religion and politics.

• Safe topics are: differences between China and the West (in the positive sense) and advances the Chinese have made.

• Focus in China is on the group, not the individual.

• Avoid self-promoting conversation and statements.

• Listen.

• When in doubt, ask.

  Accepted truths about the Chinese and doing business with China:

• They place strong emphasis on trust and mutual connections.

• They stick to their word.

• They are interested in long-range benefits.

• They respond well to foreign representatives who say they "specialize" in the PRC.

• They are sensitive to national slights (and are inclined to propaganda-type slogans).

• They will exploit the Western characteristic of impatience.

• The foreigner operates only at the tolerance of the Chinese; it is easy to do the wrong thing in China as it is a very complicated and a difficult culture and country to understand.

• Traditional practices may at first seem to take precedence over legalities or formal practices.

• Once they decide upon whom and what is best, they will steadfastly adhere to it.

• Nothing in negotiations is final until it is realized.

• If negotiations are necessary, the Chinese may use an intermediary in order to ensure they do not lose face.

• Negotiations may be blatantly self-serving.

• The higher the rank of participants in a business deal, the more serious is their interest.

• Rigidity is a sign that they believe their goals are being compromised.

• Foreigners doing business in China have observed that the best qualities to have in dealing with the Chinese are: dignity, reserve, patience, persistence, and a sensitivity to and respect for Chinese customs and temperament.

Relative to business meetings and marketing approaches, these are important points to keep in mind:

• Maintain your own national and cultural identity.— Do not try to be Chinese—but do understand and respect the ways of the people and country, and defer to them.

• Be sure to have plenty of business cards with you. They should include your company name, your position, plus any titles you carry. Don’t use abbreviations. Have your cards printed in English on one side and Chinese on the other; this can be done in hours in major business cities, such as Beijing.

• Do not present business cards with the left hand; use of both hands is preferred. Present the Chinese side up. Read cards as they are presented to you; it demonstrates courtesy and interest. You may not receive cards from all to whom you give yours, however.

Formal introductions are standard. Start with the most senior person and work down. Shaking hands is important and helps break the ice.

• Build the relationship before you sell the product. The Chinese will want to know you and believe you are sincere and honest. Take the time to let them get to know you: Personal contact is important.

• Build alliances and informal relationships at several levels within an organization and inside and outside of the formal business relationship; decisions may be the result of consensus agreements made among several people at several levels. The subtleties of business ways in China mean that ‘friends’ will get the nod for business. Such connections (‘guanxi’) are the sources of inside information critical to making deals and gaining agreements. Make lots of personal contacts!

• Many businesses are interested in the Chinese markets. The Chinese are patient and masterful negotiators—they have a reputation as being among the toughest in the world. If they do not get the appropriate concessions from one party, they know there are plenty of others waiting for their chance.

• Assume that business attire will be expected—not the increasingly ‘business casual’ of the Western world. If in doubt, always choose the professional look.

• Know the rules and regulations prevailing over your business and industry, and be aware of restrictions.

• Know the dates of Chinese holidays and do not schedule meetings or calls to take place on those days, particularly the Spring Festival or Chinese New Year, usually occurring in January or February.

• If you make a promise make sure you can, and do, deliver on it.

• Identify national goals; promote national pride.