Chinese consumers are changing.
Empowered by rising disposable incomes, consumers have become increasingly savvy: they are expecting more in terms of customer service and product quality. And, like their western counterparts, their needs and wants are evolving, but at a much faster rate.
As China continues its transition from manufacturing to an economy powered by consumption, its appetite for safe, premium goods and services is on track to increase exponentially.
Coupled with the China-Australia Free Trade Agreement (the ChAFTA), it is not surprising more Australian companies than ever before are now looking to expand into this growing market to provide the types of high-quality products that are in increasing demand.
But in order to fully appreciate how to deliver quality products and services to Chinese customers, it’s important to understand the complex dynamics that shape consumer behaviour. This leads to why consumers choose your products or services, and most importantly, why they continue to choose you.
Here are some of the key factors that drive the Chinese consumer mindset and help define great customer service in the Chinese context.
With its economy tripling in size between 2000 and 2010, China has experienced massive economic growth and social change within a very short period of time.
This has given rise to China’s increasingly sophisticated consumer classes, now numbering more than 300 million people.
Often having grown up only in times of prosperity, and in one-child families, many of these individuals are quickly climbing the demographic ladder in terms of what and how they buy.
They are increasingly accustomed to getting what they want and asserting their individuality through consumer choices.
Chinese consumers are increasingly focussed on product quality, authenticity and originality.
High-profile food and product safety scandals have led to a lack of trust in many Chinese-made products.
And as the success of companies like Blackmores and Swisse demonstrate, this is fuelling a strong preference for ‘clean and safe’ foreign products, which are now as much, if not more, about lifestyle and health than luxury brands.
These trends are also raising the bar in terms of what customers expect from products and the level of service they want to receive.
But despite this preference for trusted foreign products, simply applying western models directly to the Chinese context will not reap rewards, in most cases.
Culture remains a key driver behind consumer behaviour, and knowing how to factor cultural drivers into business, sales and marketing plans is a key to success.
When coffee giant Starbucks entered a yet undefined market space in China 10 years ago, it created an entire new category of consumption around coffee and lifestyle.
By developing a localised understanding of Chinese customers, their needs, wants and consumer behaviour, Starbucks adapted its products to suit local tastes.
It added more tea and non-caffeinated beverages to the menu, as well as festival-themed moon cakes and special offers for Chinese New Year. In addition to a strong customer loyalty program, its cafés also provide a lifestyle space, where appreciative customers meet socially or for work.
The level of marketing and brand sophistication – as well as how consumers interact with these brands and develop product loyalty – has developed with rapid pace in China over the past decade.
But while Chinese customers are bombarded with advertising on multiple fronts, many companies struggle to deliver on their brand promises, with poor customer service a key reason for this.
Brands that nail their customer service as part of their value proposition are increasingly differentiating themselves.
It’s not just international companies that are focusing on high service standards. Leading Chinese hotpot chain Haidilao is considered by many Chinese as the ‘gold standard’.
Haidilao’s customers will happily wait hours for a table. Why? While they wait, they are offered free manicures, shoeshines, internet, snacks and more. And this strong service continues at all touch points in their consumer experience.
China is a strongly relationship-based society. Building a deep relationship with your customer and being responsive to their needs will go a long way.
Respect is likewise key: showing the right level of face and respect for hierarchy, including by having the right senior people deliver key messages and deal with clients, and respecting local festivals like Chinese New Year.
Why does this matter? Because by creating a valued customer – by taking time to understand their environment, needs and how to make them special and unique – your customers will grow with you.
Nick Henderson is the manager of partnerships and development for Asialink Business, the National Centre for Asia Capability. He has two decades of experience assisting major brands like Ikea and Alibaba enter and grow in the Chinese market and build customer loyalty.
Nick Henderson is the director of Asialink Business China Practice. He has two decades of experience in assisting quality brands develop solutions to enter and grow in the Chinese market.
