Economy

Int'l firms need to better understand Chinese consumers

(Xinhua)
Updated: 2011-05-20 10:36

CHICAGO -- International companies need to better understand Chinese consumers and implement effective strategies before they could tap the tremendous potential of the Chinese market, US experts told a business forum here recently.

"China is a very fast developing country with 1.3 billion consumers. We simply cannot treat this population like one segment," Leon Bian, director of Global Enterprise Mobile Solutions at LG Electronics, told the forum titled "Marketing strategies for one billion Chinese consumers."

"In China, market segmentation is usually based on income level and purchasing power difference. For example, luxury brands such as Louis Vinton only market to the first-tier cities," Leon said.

He was echoed by Anita Tang, managing director at Royal Roots Global Inc.

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"To truly understand Chinese consumers, you need take one step further from the data collected in China market. For example, in rural areas the household income level is comparatively low. However, when considering that rural consumers don't usually have a mortgage, no car payments, and eating their own self-grown food, their disposable income level is actually not as low as you think, " said Tang.

Ann Liu, administration director at China Prep, said that in China, the first-tier cities like Beijing and Shanghai are trend setters in the country and many second-tiers are looking up at what's going on in big cities and trying to follow their footsteps.

The biggest challenge for international firms in exploring the Chinese market, Leon said, may be to achieve the balance between localization and globalization. The solution, he said, is to "understand consumers' needs, and launch specific models for Chinese consumers."

Anita also said that effective communication with Chinese consumers is the key, and that it is also important for the international firms to work with government think tanks and conduct field research in China.