In an interview with the People’s Daily, Steve M. Schmidt, the President and CEO of AC Nielsen, claims that Chinese tend to be a little more fickle when it comes to their brands — or as Marian Salzman of the Economic Times might say, they are brand sluts.
Chinese consumers are very brand conscious. That is partially why China is one of the largest markets for luxury products. But Chinese consumers are less brand loyal than consumers in some other markets in the world. Yes, they initially view foreign products as high quality, so they want to try foreign products. However, once they tried some types of foreign products, they will switch frequently and quickly to other foreign products based on price and other factors.
What are these elusive “other factors” Schmidt refers to?
I’ll take a crack at a few…
China’s marketplace is becoming deluged with new products almost every week — many of them in the luxury/comfort category. While I was in China, I watched Amway and Nuskin launch cosmetics lines to rival longtime pioneers such as Avon. Go to the cosmetics section of any large department store and you’ll find a dizzying array of new products desperately vying for a piece of that over one billion customer base.
But cosmetics isn’t the only cramped consumer arena. To see how this fierce competition in China plays out in the ice cream market, read this article in the People’s Daily.
Also, for all of these companies struggling with brand loyalty, I’d love to know what their product cycle is. Nowadays, what with IP violations and the like, it just makes business sense to stay ahead in the R&D world — often the money you spend on lawyers is better off spent on the next best thing. So if your company is lamenting the competition, then why aren’t you coming out with a better answer?
Let’s not forget about all of the first-time buyers. People out of college, over the age of 25, may be the first ones in their family to buy a computer, car or other large-ticket items. Their parents aren’t accompanying them to the car dealership or sharing the latest consumer reports on desktop PCs. It’s tough to have brand loyalty with a brand-spanking-new group of buyers. My brother-in-law, who some four years ago barely made $200 a month, now owns his own business, makes well over $1,000 a month and is the proud owner of a Buick.
My final question would be this — are the current brands in China doing a good enough job of telling their story? Have brands been taking it for granted that being foreign has a certain cache with Chinese consumers? If I were a brand going into China, I might take a lead from Watson’s, which has made building personal relationships a priority — and become the destination for the health and beauty needs of young women in China (myself included!).