China Brand Opportunities

Globalization is entering a new and more complex phase. The collective economic dominance of the United States, Europe and Japan is giving way to a greater dispersal of global economic power as developing economies contribute an ever increasing share of the world's output, trade and investment.

In this emerging environment—which Accenture calls the multipolar world—countries such as China, India and Brazil increasingly represent not just sources of labor and raw materials, but also creators and exporters of their own brands as well as robust markets for goods and services from other countries.

As part of its ongoing effort to better understand what it takes to be a high performance business in a multi-polar world, Accenture has conducted new research focused on China—both as a market for foreign goods and an emerging exporter of Chinese branded products to other countries.

This research found that companies seeking to capture the attention of increasingly brand-savvy Chinese consumers must use alternative communication channels and tailor marketing strategies to reflect the emerging attitudes and preferences of six distinct customer segments. Chinese brands, however need to take a more basic approach by focusing on marketing tasks to create product awareness and promote additional attributes.

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To determine what foreign brands must to do to capture share in the Chinese consumer market—and what Chinese brands must do to penetrate markets beyond China—Accenture examined the brand attributes which consumers value most, what they think about brands from other countries, what factors influence specific purchases, and how consumers learn about various brands.

To explore these issues, we surveyed more than 4,600 consumer household decision makers in six broad product categories—including consumer packaged goods, automotive, high-tech, home appliances, apparel and financial services—and across multiple countries, including Argentina, Australia, Brazil, Canada, China, Czech Republic, France, Germany, India, Japan, Mexico, New Zealand, Poland, Russia, South Korea, Spain, United Kingdom and the United States. This sample included more than 1,000 Chinese consumers.

Our research identified six distinct customer segments in China, including three with a stronger preference for foreign brands, and the brand characteristics they value most.

The consumer segment most likely to purchase foreign brands are young college-educated adults, mostly women, who are more affluent, free-spending—and twice as likely as any other segment to buy newly introduced brands.

The study also identified two consumer segments in China that are predisposed toward the purchase of domestic brands: a largely male segment with average incomes who buy Chinese brands out of loyalty, and heads of households who favor practicality over flash and value over exclusivity.

The research also found that Chinese consumers are not as influenced by traditional marketing channels, such as direct mail and print ads, as consumers in other parts the world. Instead, they relied on recommendations from the people they know, product reviews, endorsements and digital media.

The majority of Chinese respondents believe that being trustworthy is the brand attribute that is most important to them when making buying decisions. Reliability is also a key factor, cited by a larger majority of respondents.
The least important attribute was a company's contribution to the community.

Consumers outside of China associate Chinese brands primarily with affordable price and value for the money. A majority do not believe Chinese brands will succeed in their country in the next few years, and some are unwilling even to try Chinese brands.

While Chinese consumers show strong consideration and loyalty to domestic brands, they are also very willing to consider foreign alternatives—with a preference for some countries over others. Foreign companies should be prepared to invest in distribution or explore local partnerships to ensure that products are getting in front of potential customers.

However, foreign brands must be prepared to make their case on the Chinese consumer's terms. China cannot be effectively treated as a single market. Numerous distinct consumer segments exist across the country, each exhibiting different values, behaviors and preferences that foreign companies must fully understand—and market to—if they hope to capture a share of any one segment.

To build awareness, foreign companies should explore alternative and emerging communication channels that impact the third-party and "word-of-mouth" communities—and should not expect large traditional media buys to unlock large Chinese mind share.

Few consumers in foreign markets know what brands China offers—or have had the occasion to explore Chinese products online or in a store. For their part, Chinese brands should focus on creating awareness and availability in retail channels.

Certain markets are more open to Chinese than others, and Chinese companies should target foreign markets accordingly. Focusing on emerging and more distant markets may hold the best short- and medium-term prospects for Chinese brands; and create brand equity to be leveraged in less-welcoming markets later.

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