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Chinese Economy Slowing, Chinese Consumers Speeding

China economy slows while consumer economy grows

No Slowdown in Sales for Western Brands That Trouble to Adapt to the Evolving Chinese Consumer

For typical Main Stream Media disinfo, it doesn’t even rank in the top ten most egregious.

‘Wars to stop terror’ and ‘twelve servings of grains a day to stay healthy’ are messages doing much more damage.

‘Western Brand Sales are Slowing in China’ might even be a disinfo blessing in disguise. A company that lets journalists with no business experience sway its international expansion strategy doesn’t have the guts to tackle foreign markets.

Tribblesque Chinese consumer base

“They. Can’t, get. Enough. Scotty.”

But for those of us on the ground in China, helping feed a consumer base that resembles Tribbles, the Star Trek creatures that only get hungrier and multiply faster the more you feed them, that disinfo rankles.

Imagine the headline ‘Bush & Clinton Candidacies Show Americans Like Political Dynasties.’ We’re talking about that level of gear grinding.

“Gucci & BMW sales are slowing! Unilever isn’t moving that mass market shampoo and soap in China like it used to!”

Never mind that Mercedes’ China sales are up 20%. Keep in mind that China’s middle class will reach 680m by 2022.

Top of mind – Chinese consumers are evolving faster than most big western MNCs & brands can be bothered to keep up with.

We’ve already covered how iconic luxury brands are increasingly déclassé, as the tuhao put a merciful end to status through ostentation. But we haven’t emphasized, and in fact can’t overemphasize, how quickly the Chinese are mirroring western demand for authentic, quality, premium goods that reflect modern consumer discernment.

Three ultra-light case studies to show how western brands that respect this evolution are winning in China, with the promise to back up the stories with data for any who trouble to get in touch.

Health & Beauty: 100% Pure

All of 100% Pure’s 550 products are made exclusively from safe, organic, naturally-occurring ingredients: ginseng, cacao – none of the synthetic toxins in Unilever products that more and more Chinese are leery of, thanks in part to the world’s most overrated ‘sales & branding channel’, WeChat.

The company is already popular in China, by delivering on its brand promise of the world’s purest health & beauty products, rather than by pivoting to adjust to the inscrutable preferences of we culturally obscure Chinese.

Says 100% Pure’s CEO Ric Kostik, “We fully expect our sales volume in China to outgrow those in the U.S. in about five years.”

Food: General Mills

Try telling 100m middle class Chinese moms their kids shouldn’t be gobbling healthy dairy – you know, since GDP estimates look grim. Yogurt alone is a $10b category in China, growing double digits.

General Mills has just brought Yoplait to market here, and will differentiate from the endless supermarket ranks of congealed cow sweat by going French, with “Perle de Lait” and “Panier de Fruits”.

“With the tremendous economic growth in China, consumers are increasingly demanding better quality and experience of foods,” says president of General Mills Greater China, Gary Chu.

Mills’ China operation has grown at a 15 percent rate over the past four years. Haagen-Dazs ice cream makes up for more than half of those sales. Those who pin HD’s success in market on cute innovations like mooncakes and ice cream hot pot are the same folks who credit the Oriental chicken wrap for Starbucks’ runaway growth here.

Rather, Hagen Dazs stayed the Rolls Royce of ice cream, despite qualitative advice to go rickshaw (“Chinese consumers are price sensitive and lactose intolerant!”)

Auto: Skoda

Audi sales slipped 1.6% in China for May. Mercedes was up 20%, as mentioned. Meanwhile, sales of the Skoda Octavia increased 70% in the same period. The secret? Lots of value (power, storage, reliability, sun roof and other accessories) at a lower price relative to competitors. Some secret.

OK, OK. You want some Chinese cultural differentiation? Skoda’s slogan is “Simply clever”.

Do you know why McGrady jerseys always outsold Yao Ming’s in China? Because he’s small, but clever. Like the Monkey King. And while the appeal of being the other drivers’ problem in an SUV still has great appeal here, as it does in the West, clever is a heroic quality in China. Simplicity? Not so much – except to Daoists.

 

 

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