While reading a recent interview I was struck by a comment of a major luxury brand CMO, who claimed that “the Chinese consumer isn’t very loyal.” In my view, that is a misstatement or a misunderstanding of consumer behavior in China. To be fair, you need to read the remarks in context. Taken as a whole, the interview offers insight, particularly regarding influencer marketing in China.
But the expression still left me a bit uncomfortable. The use of the word “loyalty” in this sense is off-point for two reasons. First, because it could be perceived as condescending or even insulting, implying that the consumer is under some sort of permanent obligation to stay with a brand. Second, it is exculpatory language, placing all responsibility on the consumer and none on the brand.
The functional equivalent of a brand stating that consumers are not loyal would be a brand admitting that it is not very good at retaining customers. Smart brands refresh themselves and engage in a permanent courtship. Less capable brands stagnate and complain that customers “are not very loyal.”
The point may be more terminological than analytical. It is probably more useful to understand the ways in which Chinese consumers might differ from, say, U.S. consumers. In my experience, I have observed four persistent differences, though there certainly are others. The China consumer market is defined by:
1. A lack of favorites
In most markets, there is an absence of an incumbent or a legacy brand; this applies to many categories but is particularly true of the premium and luxury space. Remember, prosperity is so recent to China that there is essentially no consumer in the market who is purchasing the same brands or even products that their parents purchased.
2. Demographic focus
The consumer population skews urban, young, affluent and female. No surprise here. They have the money and household influence, and smart brands are catering to this audience. L’Oreal is addressing its audience in China, for example, by offering “click and collect” experiences at duty-free retailers. Consumers can reserve products, pay for them online, and then pick them up at the airport.
3. Digital footprint
The Chinese consumer is digitally-driven, both through discovery as well as through purchase. It’s easy to be an absolutist here – If your brand is not communicating digitally, your brand is not communicating. That means engaging the consumer, having a conversation with the consumer, even tantalizing the consumer.
Nike China understands this better than anyone, having recently introduced a mobile digital experience to give basketball fans an engaging view of what it’s like competing in Nike’s High School Basketball League (HBL).
4. A passion for novelty
The Chinese consumer has a passion for novelty. Consumerism is a journey. It is self-discovery. It is empowering to the individual. For example, Mars recently overhauled its well-known Snickers bars by working with Alibaba to devise a spicy chili version just for China. The bar resulted from intensive research and surveys of Chinese consumers to discover that many craved spicy food and would be interested to try chocolate with a spicy kick.
The project relied on the “Tmall Innovation Center” (TMIC) to survey consumers and respond to their demands by working with established brands, resulting in a highly successful new product. All of this means a more experimental consumer mindset and arguably the most favorable opportunity for new brands in the world. The challenge, of course, is that it will take resources, creativity, and brand strength to capture this opportunity.
Are Chinese consumers loyal? Sure, if you fight for them. Frank Lavin is the CEO of Export Now, the leading operator of China e-commerce stores for international brands. He previously worked on China issues in government, finance, and communications.