Protecting brands moving into China. Chinese consumers are getting richer.\u00a0 According to the Economist Intelligence Unit currently 132 million people in China are considered \u2018upper middle class\u2019, which is defined as those with a disposable income of US$10,000 per year.\u00a0 By 2030 this figure is projected to rise to 480 million – 35% of China\u2019s population. \u00a0And this new breed of moneyed citizens is young. According to the Hurun Report 2016, Chinese millionaires have an average age of 37 and 45% of Chinese luxury consumers are 35 or younger (China-Britain Business Council).<\/p>\n
As the demographics change, so too do the business models.\u00a0 Until recently, most companies focused on offering mass market products at affordable prices.\u00a0 In 2010, McKinsey & Company reported that Chinese customers identified function as the most important factor when buying a product.\u00a0 Yet just two years later consumers rated emotional factors as more important. All brand owners need to be sensitive to this shift.<\/p>\n
Louis Vuitton was one of the first luxury brands in China, and its name soon became synonymous with prestige and exclusivity.\u00a0 However, as the population grew richer the company found itself suffering from the \u2018secretary effect\u2019, where modestly-paid office workers could save up their salaries to buy a Louis Vuitton handbag.\u00a0 The brand was in danger of becoming mass-market and losing its appeal.<\/p>\n
In response, the company began offering limited product ranges to an elite audience and invited select guests to attend special events with famous Chinese actress Fan Bingbing.\u00a0 As well as preserving its exclusive image, the company discovered the importance of providing an \u2018experience\u2019\u2013 no longer was it just about the product.<\/p>\n
Other companies have drawn similar conclusions.\u00a0 Peter Wood, COO of clothing retailer AllSaints explains: \u201cwe put brand experience at the core of everything we do\u2026we\u2019re competing against a weekend in Barcelona or a meal at a good restaurant, an experience.\u201d<\/p>\n
Successful brands are those that can make an emotional connection with the purchaser.\u00a0 Chinese millennials have not grown up with the brands that their American and European counterparts have.\u00a0 With fewer emotional ties connecting them to established western brands, these consumers seek word-of-mouth recommendations, often through social media.\u00a0 Social media is big in China, although the platforms used differ from those in the west.\u00a0 WeChat is the go-to instant messaging app, while Youku Tudou is China\u2019s answer to YouTube.\u00a0 Alibaba-operated Taobao (meaning \u2018search for treasure\u2019) is the country\u2019s largest online marketplace.\u00a0 Chinese citizens spend nearly three hours a day online, much of it via smartphone, and good brand owners tailor their sites to ensure that their visitors receive as personal an experience as possible.\u00a0 In a country of diverse religions, languages and cultures, using local influencers can put a company ahead of its competitors.<\/p>\n
A company that wants to launch a brand in China must pay attention to social media and word-of-mouth marketing, not least because traditional ways of reaching its target audience may be limited.\u00a0 In 2011 the advertising of luxury products on billboards was banned. \u00a0Apparently concerned that high-end brands were promoting \u2018incorrect values\u2019, the government introduced a similar ban on TV and radio advertising in 2013.<\/p>\n
Unfortunately, the Chinese government has been less vigilant tackling the well-known counterfeit problems on the market.\u00a0 Having removed Taobao from its blacklist of \u2018notorious marketplaces\u2019 in 2012, the US government returned it to the list in 2016 after becoming unconvinced by Chinese authorities\u2019 efforts to clamp down on the number of fake goods being sold. According to Netnames, some clients of Taobao estimate that up to 80% of merchandise sold on the site is fake.<\/p>\n
Consequently, brand owners must take active steps to protect their intellectual property in China and in a timely fashion, remembering:<\/p>\n
There are challenges when moving into China, but for a company that markets and protects its brand properly the potential rewards are high.<\/p>\n
Protecting brands moving into China. Chinese consumers are getting richer.\u00a0 According to the Economist Intelligence Unit currently 132 million people in China are considered \u2018upper middle class\u2019, which is defined …<\/p>\n","protected":false},"author":315,"featured_media":9004111222138234,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[498,497],"tags":[],"class_list":["post-9003","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles","category-knowledge-hub","sector-retail"],"acf":[],"yoast_head":"\n