WenZhou

1
WenZhou

• Teddy
• Ben
• Nina
• Simon

2
How do you perceive the regional differences in
China in terms of market development, culture,
customs, lifestyles, and consumption patterns?
3

• Seven regional markets South, East, North,
  Central, Southwest, Northwest, Northeast

4
Market development

• Growth market
• South and East China
• more advance in economic development and have
  more affluent consumers than other regions
• Guangdong's exports have doubled in the past five
  years to reach 153 billion in 2003
• Shanghai
• attracting 21 billion in FDI in 2003
• preferred site for technology firms and heavy
  industry

5

• Emerging market
• North, Central and Southwest of China
• increasingly attractive to global companies
• e.g. Beijing Tianjin
• economy is growing fast and become more open over
  last few years
• attracted billions of dollars of investment from
  some of the world's biggest manufacturers.
• high investment on transportation recent years
  e.g. high-speed rail new expressway ?reduce
  traveling time (for Beijing's Olympic Games in
  2008 )

6

• Untapped market
• Northeast and Northwest
• limited agricultural output industrial output
• limited infrastructure
• ?relatively poor backward poor
• Rich of natural resource e.g. oil, gas, coal,
  electricity
• e.g. Xinjiang significant coal resources
• ? basis for future economic growth and
  development
• ?waiting to exposed by foreign firms

7
Income

• Average annual household income
• South China and East China (Growth markets) more
  than 20,000 ?relatively rich
• North China, Central China Southwest China
  (emerging market) 10,000-20,000
• Northeast Northwest (untapped market) below
  10,000 ?relatively poor

8
Culture

• Different regions? different culture due to
  historical background and ethnicity
• South China
• Min-Yue Culture plenty of contact with the
  outside world and great emphasis on mercantile
  entrepreneurship
• each province has own main dialect e.g.
  Cantonese, Fukienese
• East China
• Shanghai regional cultural nucleus
• ? Hai-pai culture have the best amenities and
  product for enhancing the quality of life

9

• North China
• Beijing
• Jing-pai culture high value to the Confucian
  doctrines of hierarchy, stability and control
• Central China
• Diverse local cultures in dialects, food and
  operative styles
• Southwest China
• many ethic minority ?most culturally diverse
  region

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• Northeast
• Manchurian and Korean are the biggest ethnic
  minorities
• great impact on local cultures
• Northwest China
• Xian cultural capital
• Mongolians, Muslim Tibetans are major ethnic
  minorities

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Customs

• Same Festival has different customs in different
  region
• Lunar New Year
• Southwest China South China e.g. Sichuan,
  Fujian flower
• ? decoration of house, create happy atmosphere
• Northeast China Central e.g. Heilongjiang,
  Anhui different kind of food and vegetable
• Wuhan, NanChang peppers, red lantern
• ? hope for good luck

12
Lifestyles

• consumers from developed areas enjoy more active
  lifestyle
• South China
• have been long exposed to foreign products and
  emphasize conspicuous consumption
• favor foreign brand
• East China
• Consumers are innovative and cosmopolitan
• trend in fashion and lifestyles
• Both like traveling, listening to music, going to
  the park and movies

13

• Emerging market
• less exposed to foreign goods
• consumers are relatively conservative
• follow the trend in major metropolitan and
  coastal areas
• Like to see movies
• Untapped market
• consumers engaged in less costly activities
• e.g. Northeast seldom to see movie but often
  visit dancing hall

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Consumption pattern

• little regional difference in purchase of
  traditional food and beverage items e.g. rice
  tea, but income affect the consumption of new or
  western product and luxury goods
• ? penetration rate in affluent regions is higher
  than poor region

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• Growth market
• South China high consumer purchasing power
  adopting new and luxury goods e.g. CD player, VCD
• East China leading in lifestyle products e.g.
  microwave oven
• tradition durables e.g. washing machine
• high ownership of information appliances e.g.
  private telephone, pager
• Many new product have penetrated
• pioneers for the rest of China

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• Emerging market (North China, Central China
  Southwest China)
• high consumption of liquor and beer
• relatively conservative
• Untapped market (Northeast Northwest China)
• Seldom purchase modern product e.g. computer ?
  uninformed, immobile, relatively poor

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Medium for information

• Television-most popular medium
• Growth market
• cable TV (South China)
• Radio usage is very low
• high newspaper readership ?high level of education

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• Emerging market
• Radio usage is relatively high
• high magazine readership (Central China)
• Untapped market
• Broadcast TV
• lowest newspaper readership
• Low magazine readership

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Do Chinese consumers from different regions vary
in their consumption values and marketing
responses, such as quality-price tradeoff,
husband-wife dyad, decision making style, brand
preferences and loyalty, reactions to promotion
and sales, service expectations, and perhaps even
their complaint behavior?
20
Quality-price tradeoff
Urban areas Rural areas
Less price-conscious High price for high Quality More price-conscious
Source referred 1.Consumption patterns of
Chinese urban and rural consumers, Tao
Sun, Guohua Wu.  The Journal of Consumer
Marketing. Santa Barbara 2004.Vol. 21, Iss. 4/5 
 pg. 245 2. Who is the Chinese consumer?,
Bernd Schmitt, Oct. 4, 1996
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Quality-price tradeoff

• Price consciousness
• Rural consumers were more price-conscious when
  compared with urban consumers.
• Rural consumers were more likely to do
  comparison-shopping , to negotiate over the
  price.
• Quality consciousness
• Gallup interviewed 3,400 people, 52 urban
  respondents (vs. 38 of all respondents) would
  pay higher prices for high quality.

Source referred 1.Consumption patterns of
Chinese urban and rural consumers, Tao
Sun, Guohua Wu.  The Journal of Consumer
Marketing. Santa Barbara 2004.Vol. 21, Iss. 4/5 
 pg. 245 2. Who is the Chinese consumer?,
Bernd Schmitt, Oct. 4, 1996
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Husband-wife dyad
Urban areas Rural areas
Women have more or equal decision power More equal Men have more decision power Men are superior
Source referred??? ,?????????????????,??????
1998??4?
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Husband-wife dyad

• Decision Power
• Generally, the percentage of husband and wife
  make decisions together is high.(????????????)
• Wives have more says on economic control,
  housework, leisure arrangement and external
  relationship.(????????????????????????????????)
• Husbands have more says on housing, decoration
  and childrens schooling and job
  seeking(??????????????????????????????? )
• However, this trend is only limited in cities,
  rural areas are in contrast. Husbands have more
  decision power than wives. (?????????,?????,??????
  ????????)

Source referred??? ,?????????????????,??????
1998??4?
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Husband-wife dyad
Source referred??? ,?????????????????,??????
1998??4?
25
Husband-wife dyad

Source referred??? ,?????????????????,??????
1998??4?
26
Husband-wife dyad

• Equality on status
• Chinese rural females family status are lower
  than females in cities.(????????????????? )
• Urban couples are more equal and wives have more
  influence and decision power in families.
  (??????????????????????????? )

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Husband-wife dyad
Source referred??? ,?????????????????,??????
1998??4?
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Purchasing style
Urban areas Rural areas
More Sophisticated shoppers Usually go shopping with others More Product-innovative Less Sophisticated shoppers Usually go shopping alone Less Product-innovative
Source referred Consumption patterns of Chinese
urban and rural consumers, Tao Sun, Guohua Wu. 
The Journal of Consumer Marketing. Santa
Barbara 2004.Vol. 21, Iss. 4/5  pg. 245
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Purchasing style

• Patronage behavior
• Urban consumers were more sophisticated shoppers.
  
• Urban consumers were more likely to shop at
  well-known stores, to visit large-scale stores,
  and to shop at stores with quality customer
  service .
• For many rural consumers, going to the gigantic
  shopping malls in the city areas might be simply
  a once-a-year experience.

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Purchasing style

• Shopping partners
• When asked to tell with whom they go shopping the
  most often, 37.1 percent of urban consumers
  reported going shopping alone, as opposed to 56.9
  percent for rural consumers.
• With relatively easier access to shopping
  outlets, it is possible that urban consumers tend
  to consider shopping as a group entertainment
  activity.
• It seems that friends can wield bigger potential
  influences (especially situational influences)
  than spouses do to rural consumers.

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Purchasing style

• Product innovativeness
• Rural consumers were less product-innovative.
• Compared with urban consumers, rural consumers
  were more likely to buy products that
• were already used by everyone else,
• to adopt the products recommended by friends and
  relatives,
• to buy those "trendy" products only after they
  are already consumed by everybody else.

Source referred Consumption patterns of Chinese
urban and rural consumers, Tao Sun, Guohua Wu. 
The Journal of Consumer Marketing. Santa
Barbara 2004.Vol. 21, Iss. 4/5  pg. 245
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Brand preferences and loyalty

• Interiors
• Concern about effectiveness and less in their
  personal image.
• Career does not require a formal dress up.
• Less conscious of brand name

• Coast
• highlighting trendiness and a relatively strong
  sense of individuality and image.
• It is obvious in fashion and electronics
  industries.
• Chief Executive China magazine, Global Sources,
  released that Nokia is the top in "Top 10
  Executive Brands in China."
• Top Cell phones Nokia
• Desktop PCs Lenovo
• Men's Clothing Armani

http//www.cellular-news.com/story/17931.php
33
Brand preferences and loyalty

• Interiors
• Concern about effectiveness and less in their
  personal image.
• Career does not require a formal dress up.
• Less conscious of brand name

• Coast
• highlighting trendiness and a relatively strong
  sense of individuality and image.
• It is obvious in fashion and electronics
  industries.
• Chief Executive China magazine, Global Sources,
  released that Nokia is the top in "Top 10
  Executive Brands in China."
• Top Cell phones Nokia
• Desktop PCs Lenovo
• Men's Clothing Armani

http//www.cellular-news.com/story/17931.php
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Reactions to promotion and sales

• Interiors
• Simple live and low income.
• Focus on Satisfying the needs.
• More likely to believe ads Product
  effectiveness.

• Coast
• Materialistic and high income.
• Focus on quality of life.
• More likely to believe ads Contain drama
  Promote corporate image Product features.

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Service expectations

• Interiors
• Product is the main part.
• Service is not essential or useless.
• Not care about the service and with low service
  expectations in general.

• Coast
• Service is also a part in purchasing product such
  as pre-sell, post-sell service and maintenance.
• Much care about the service and usually with high
  service expectation.

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Complaint behavior

• Interiors
• Low education level.
• sense of abasement
• Not brave enough to tell and complain

• Coast
• High education level.
• Not shy to voice out their opinion.

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How regional differences affect marketing
strategies in China?How do you compare the
effectiveness of standardized approach vs
localized strategics,and why?
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Regional culture value

• Mass media
• Foreign brand and commercial Ad affecting Major
  cities culture and value
• Northest cities has totally different Ad medium
• Different culture and value develop
• Not prefer to buy foreign goods

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Pricing

• price is also a determinant factor for different
  region people
• In untapped market, people would more concern of
  the price of products
• In growth market, they would more prefer to buy
  foreign goods and luxuries

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Geographical disparity

• Wide place and countless geographical obstacle
• Northwest China where is around the mountain
• Transportation problem

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Product segmentation

• Segmentation is significantly important
• Shanghai people like fashion
• consumers from poorer regions engaged in less
  costly activities.
• Some regions like drinking tea, some regions like
  drinking beer

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Standardized v. Localized

• Easy
• Efficient
• Risky

• Time consuming
• Effective
• Penetrating the market
• cutting down the risk
• For example- PG, before they penetrate the
  market of China, they spend 3 years time to do
  research.

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End

• Thank you very much