How to Win Over the Chinese Consumer

Westerners have a hard time understanding that the basic structure of Chinese society is fundamentally different from the West. By that, I mean individuals do not exist in China outside of their obligations and responsibilities to other people. So, individualism in a Western sense, and by that I mean society encouraging you to define yourself independent of society, doesn't exist.

On the other hand, China is a Confucian society, so it's also very ambitious. Egos are huge. So, on the surface, Chinese want to be—uh—Western individualism is very aspirational, but it's ultimately forbidden fruit. I always call it Eve's apple.

As China becomes modern, the way they express their place in society seems Western, but in actuality, it's conforming to Chinese imperatives of generating acknowledgment for your contribution to society. Most Westerners who have any idea at all of Confucian society tend to think of it as very hierarchical, regimented, rule-bound, restrictive. That's true—uh—to a certain extent, but Confucian society was also the world's first socially mobile society. By mastering the system, by being able to navigate the rules and become a connoisseur of the rules, you could climb yourself up a socially mandated hierarchy of success.

So, there's a tension in Confucian society that's really quite dramatic, and that's between, on one hand, regimentation, but on the other hand, ambition. This tension between regimentation and ambition leads to what I would consider the golden rule of marketing and brand consumption in China, which is that people want to stand out by fitting in. That means that people want to project their status, but at the same time, do so in a way that protects themselves from any aberrant moves or any overt rebellion.

So, Chinese people are willing to spend a lot of money on goods that can be seen by the public, whether it be a mobile phone or a car or even shiny hair. But when it comes to anything that is privately consumed, it's going to be very price sensitive. So, this public consumption imperative leads to a lot of different business models. I mean, you take a look at the way Starbucks has succeeded in China with over 1,500 stores. That's—uh—because they have reconfigured those sites to be public destination sites where bands of new generation professionals go in there together to proclaim their affiliation with a new generation elite.

So, this projection of status drives a lot of multinational brands' business strategy. On the other hand, however, when you project status, you can't do it so obviously. So, Chinese are looking to project their status in an understated way. That's why Chinese women, for example, love diamonds—it’s because they sparkle; they don't glare. So, the sparkle captures attention, but it does so with a whisper.

Or the Mont Blanc pen for the man—why do people like the Mont Blanc pen? They like it because of that six-pointed star that's very obviously but still somehow discreetly placed at the top of the cap. So, the simple act of putting a pen in your pocket says something about the man; that he's in charge and he's a master of something. This projection of status, but in an understated way, this public consumption over private consumption, as it relates to price premiums and what people are willing to pay for them as an investment in their status, drives a lot of the consumption habits that you see in China.