China's Super Consumers

Chinese Consumers are Changing The World – Understand Them and Sell To Them

China has transformed itself from a feudal economy in the 19^th century, to Mao and Communism in the 20^th century, to the largest consumer market in the world by the early 21^st century. China's Super Consumers explores the extraordinary birth of consumerism in China and explains who these super consumers are. China's Super Consumers offers an in-depth explanation of what's inside the minds of Chinese consumers and explores what they buy, where they buy, how they buy, and most importantly why they buy.

The book is filled with real-world stories of the foreign and domestic companies, leading brands, and top executives who have succeeded in selling to this burgeoning marketplace. This remarkable book also takes you inside the boardrooms of the people who understand Chinese consumers and have had success in the Chinese market.

• A hands-on resource for succeeding in the Chinese marketplace
• Filled with real-world stories of companies who have made an impact in China
• Discover what the Chinese consumer wants and how to deliver the goods
• Written by Savio Chan and Michael Zakkour, two leading experts on the Chinese market

This book is an invaluable resource for anyone who wants a clear understanding of how China's Super Consumers are changing the world and how to sell to them.

Preface xi

Acknowledgments xiii

Introduction: The China Dream 1

Our Intent 7

The Country within a Country 7

Part I History, Culture, and Language Matter—The Birth of Chinese Consumerism 11

Chapter 1 From Feudalism to Fendi 13

Back to the Future 14

Chinese Consumption: What’s Old Is New Again (Tenfold!) 16

China’s Growth Is Different 18

Chapter 2 Orientation 21

A Code to the Chinese Mind-set 24

Contradiction and Paradox 30

Summary 31

Chapter 3 A Self-Contained Empire 33

Chapter 4 The First Globalization 41

Chapter 5 Marco Polo and the Two Admirals of the Sea 43

The Two Admirals of the Sea 44

Chapter 6 An Insatiable Appetite 49

Freedom Creates Wealth in the West 51

Chapter 7 Opium, Imperialism, and Decay 53

Opium and War 54

A Century of Exploitation 54

End of War—Continuation of War 56

Chapter 8 The People’s Republic 57

The New China 58

Chapter 9 The Mandate of Heaven 61

Opening and Reform 65

Green Shoots 67

Chapter 10 A Boom Is Born 69

A Boom Starts with a Swoosh and a Shot of Espresso 71

Change at Hyper Speed 74

Part II The Chinese Super Consumer—From Birth to Adolescence and Maturity 77

Chapter 11 From Sandpaper to Sephora—The First Super Consumers 79

American Century Redux 80

Want. Need. Buy. Show Off. Keep Up. 82

Super Consumption Goes Global 82

Go West, Young Man 83

China’s Own Postwar Boom and Birth of the Chinese Super Consumer 85

In the Beginning 87

Chapter 12 The China Market + The China Global Demographic = China’s Super Consumers 91

The China Whisperer 93

Spinning in a Whirlpool 95

The Great Pizza Wars: In China, Everything Is Possible, but Nothing Is Easy 96

Listen to the Great One 97

Stay the Course, Even When the Seas Get Rough 98

Nestlé: Navigating the Teen Years 100

Chapter 13 The China Global Demographic 103

The Precious Gift of Time 104

Meet the Tangs 107

Chapter 14 Channels 113

Department Stores 114

Street-Level Stores 115

Malls 116

Grocery Stores/Supermarkets 118

Hypermarkets 119

Convenience Stores 120

Not Your Father’s Post Office 121

Lifestyle Stores 126

Specialty Retailers 127

Multibrand Retail 127

Chapter 15 E-commerce and the Rise of Alibaba 129

Alibaba 130

NFL Footballs “Sold Out” 132

Why E-commerce? 135

Chapter 16 Supply Chains to Satisfy China’s Super

Consumers 139

Supply Chain Megaprocesses 140

Plan 141

Buy 142

Make 142

Distribute 143

Sell 144

Aligning Strategy, Structure, and Implementation 144

Chapter 17 Segmentation 147

Surveying China 147

A Most Discerning Consumer 152

Chapter 18 Marketing 155

Consumer Impulses and Desires 156

Lenovo’s Approach: The Best of Both Worlds 157

From East to West to Wei East 161

Baby Boom 164

Brand Advertising in China 169

Going Native—Tory Burch, Gossip Girl, and Made-for-China TV 170

The Role of Social Media in Marketing: United States versus China 173

Promotions 177

Chapter 19 The Chinese Luxury and Premium Market 179

The Nouveau Riche: Pebble Beach or Nothing 180

The Gifting Group 181

China’s Engine: The New Middle Class Seeks Quality and Value 182

Affordable Luxury: A Tiffany’s Tie Clip and an Entry-Level BMW 183

China’s Luxury Downturn: Myths and Realities 186

Chapter 20 Travel and Tourism 191

Take a Walk on Boardwalk—Pass Go, Collect $200 (Thousand!) 195

Chapter 21 Chinese Super Consumers Changing the World 203

The Microsoft Miracle 203

A Final Word about China’s Super Consumers 207

Index 213

SAVIO S. CHAN is a pre-eminent expert on US-China partnerships and building loyalty with Chinese luxury consumers. He serves as President and Chief Executive Officer of US China Partners Inc., a consulting and advisory firm that helps organizations design and implement their China consumer strategies. He spent two decades as a consultant on market entry, cross-border M&A and joint venture partnership innovation with some of the largest and best known global luxury and consumer brands, Fortune 500 and Chinese large State-Own and private companies.

He is frequently featured in interviews and articles in the New York Times, Forbes, Chief Executive Magazine, and China Daily News. Savio serves as a member of the National Committee on US-China Relations and advises many ultra-high net worth legacy families in both the US and China. He is a frequent keynote speaker and panelist at various business and technology events including the Conference Board, Microsoft Technology Conference, Columbia China Conference, and Wharton China Business Forum.

MICHAEL A. ZAKKOUR is a principal at the global business consulting firm Tompkins International, where he leads the China/APAC practice. He has more than 18 years of international consulting, marketing and business development experience, primarily in China. He has advised more than 300 public and private companies and organizations on creating and implementing strategies to enter, grow and change their businesses in China and on their engagement with Chinese consumers. He has researched, and written extensively about Chinese consumers and consumption and the China Global Consumer Demographic, and has advised companies from around the world on retailing, branding, e-commerce, production, supply chains, and partnerships in China. He writes about business in China for Forbes and JING Daily and speaks frequently at universities, conferences, and vertical industry events. He is also a special advisor to the Confucius Institute for Business at the State University of New York. Michael also spent four years on the Board of Directors of the Asian Financial Society. His commentary and articles have appeared in the Wall Street Journal, Harvard Business Review, WWD, NPR, China Business Review, MSNBC, Newsweek, The Economist and many other commercial and academic media and journals.

China is now home to the fastest growing middle class the world has ever seen and a rapidly expanding group of wealthy and super-wealthy consumers, creating a new class of Super Consumers, the likes of which the world has not seen since post-war America and the baby boomers. A powerful Chinese consumer class was born 30 years ago and that group is now poised to dominate the global economy. China’s Super Consumers will introduce you to the “China Global Demographic” and the importance of catering to it as well as “The China Market.”

Through first hand storytelling by executives, case studies, original research and the authors’ own experiences in helping companies sell to Chinese consumers, Chan and Zakkour provide powerful insights on the causes, results and implications of the Chinese consumer boom. Established companies, start-ups, and aspiring entrepreneurs can learn from and identify with these stories to either improve or begin a meaningful and long-lasting engagement with 1 billion customers. China’s Super Consumers explains who they are, who is selling to them, what and why they are buying, and how they are changing the world. This book will help you better understand what you can do to ensure you are part of this business/social/consumer revolution, and not a victim of it.

Chinese super consumers are changing the world at a pace unprecedented in human history. Purchase decisions made in Shanghai now have ripple effects on the lives and livelihoods of people from Lagos to Los Angeles. They are changing the way companies design, build, market, and sell their products. They are changing the balance of trade on a global scale. They are making and breaking brands. They are changing the way bricks and mortar and e-commerce retail takes place everywhere, not just in China. Their shopping habits and attitudes, channel preferences, and communication patterns are changing the very idea of what it means to plan, make, buy, move, store, and sell products around the world.

Chinese consumers are changing China and the world in ways almost impossible to forsee even five years ago. China’s Super Consumers prepares you for this new reality and explains how you can engage with, serve and profit from the most important consumer market of the 21st century.