Top luxury brands believe that Chinese market has 1.3 billion eager yearning for their consumers. There’s nothing more dangerous than looks compelling false truth. So, I agree with chief operating officer of Hermes Christian Blanckaert, at the meeting, he said: “the road to China’s luxury covered with ‘bodies’”. This is a horror of warning, the following are some of my views, hope can to some extent help businesses be more careful when making a business plan, and be able to more accurately assess the risk.
Misunderstanding 1: the awareness of 1.3 billion consumers
For many brands, with China’s 1.3 billion consumers are not just a distant dream, are more likely to be forever impossible fantasy. By 2022, China’s urbanization level can reach 55.1%, but there are still 44.9% of the population living in the countryside, less that 44.9% of the people not only income, education and social welfare, and rarely, very few of them may buy domestic cars and computers, but the luxury jewelry, high-grade wine, such as mobile phones of the latest model, they are still quite far away.
Misunderstanding 2: Shanghai, entry to China market
Succeed in Shanghai, is to grasp the whole of China.
One of my good friends, and only two years older than me, but already have billions of dollars of assets. After he served in the army, switch to local government services. Now he runs his own business, manufacturing, selling apparel to second-tier cities, his business involving my hometown nantong, even such extremely the northern city of Harbin. Such examples abound.
China is too big, or 4 cities at county level is only 1333. China has a variety of consumer and market, each market is very huge, pregnant with good opportunities to create wealth. The most important thing is that you want to know who is your customer, what they really need, then tailored to fit their products for them.
Misunderstanding 3: Chinese consumers like cheap products only
Not just Chinese consumers all over the world people are concerned about the price.
Have you ever seen a billionaire’s wife excited by gucci handbags at a 20% discount? Another example is the famous Sweden’s H&M fashion brand, this brand is successful, is that it has “great design”, to lure consumers “appropriate value” at the same time.
Chinese consumers, especially those savvy consumers, they know when they should raise their standards, when can lower your standards. In 2004, 12 million mainland tourists to visit Hong Kong, they buy? They buy real digital camera, iPod and high-grade watch (a wrist watch price hk $250000). Chinese consumers will choose cheap food before, but in anhui fuyang inferior milk powder after the occurrence of tragic events, they are more willing to buy at higher price and high quality food, for example, all kinds of green food.
Misunderstanding 4: the Chinese is patriotic, choose domestic brands preferentially
Like all consumers around the world, Chinese consumers are value and brand image to choose. Although a strong brand value has its identity and beliefs, but they are not on behalf of the state’s ideology. In Beijing and Shanghai, who wear “ShanghaiTang”? 50% is Chinese. Why did they wear so expensive Chinese fashion brand? Not for patriotic, but because of who I am “ShanghaiTang” has a unique aesthetic feeling, manual tunnel. Tunnel, is consumer brand one of respect and desire for root cause.
Misunderstanding 5: the role of the brand is to improve the standard of living
This view is not true, especially for the new rich class, new middle class, and even the old middle class. What’s the hottest in China now? Is travel! What is the most main purpose of travel? Is eye-opening and gain new experiences. Although Chinese consumers to spend money on leisure is less than the money spent on home appliances, but the proportion of the changes soon. Just look at the vigorous development of the catering industry in China, you will understand.
Misunderstanding 6: market for children in China is very big
Many people think that children in China market is too big, in fact, the Chinese market a lot of chance in the silver market is one of the biggest market. In 1992, the elderly over the age of 60 with an average of three grandchildren, in 2012, that figure will fall to 0.8. China’s ageing is not only a market, but also a rapid ageing of the market. Alarming is that although China’s silver hair market is very big, but it is a huge low-profit market.
Misunderstanding 7: consumer advertising information without imagination
According to my personal experience, some people hang the words in the mouth, because there is no good ideas in marketing and advertising communication, they can use this as an excuse. “Water margin” in one wine AD ─ ─ “three bowls of duty”, however, say the wine is very pure, let a person too like, so that drink too much and have no energy to deal with a tiger on the mountain. This AD is very interesting, also very smart, enough to prove that Chinese consumers have enough wisdom to appreciate the clever ideas.
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