It is often said that China is not one homogenous market but comprises many markets.  Indeed, with a population of 1.3 billion, China is geographically large and there are some major regional differences in terms of culture, language and ultimately consumer behaviour. 

Considering the pace of economic growth, Chinese cities can be categorized into different tiers reflecting the financial capability of local residents as well as their standard of living. This way of categorization also reflects the varying levels of consumerism and sophistication with regards to brands and aspiration in life.  

First Tier markets, or the leading economies, include fortress cities such as Beijing, Shanghai and Guangzhou.  The capital cities of more developed provinces form the Second Tier cities, while third and fourth tier cities are county cities which are less economically developed.

In Second and Third tier cities, while many Western brands may have a distribution presence, Chinese brands tend to dominate.  This is because consumers there are more price conscious and less receptive to many Western positioning imperatives such as heightened individualism, a sense of ‘self-worth’ or ‘treating oneself’.  Most of these cultures are still collective in nature favouring shared and established behaviour.

Specialty Branded Products

In addition, in a country as large and diverse as China the cities of choice for a study can be even more critical especially for specialist products.  For example with home use tests for various skin care brands Anovax have found that climate (varying widely across China!) can be a significant factor in influencing how consumers use a product and why e.g. seen in frequency of use, application behaviour, benefit expectations, etc.

Taste Differences Across China

Taste preferences are also an aspect that should always be considered in any food or beverage study.  In the West, we go to a Chinese restaurant seeking out our perception of what ‘Chinese food’ is. However, Chinese cuisine is as diverse as the country itself. In taste testing we have found significantly different preferences for food types, ingredients, etc. and this does shape general taste orientations at city levels. These differences are affected by availability of certain ingredients (especially things like fresh seafood versus preserved foods, the wide range of peppers, use of sugar, etc!), cultural preferences, as well as access to and acceptance of ‘Western’ staples such as cheese, pasta, etc. One very prominent example of this is Sichuan, a province well-known for its preference toward spicy dishes (and by spicy we mean very spicy!). Results of sensory studies will often show clear differences in taste preference and aroma acceptance by province or by ‘culinary culture’.

Dealing With Brand Positioning Across Cities

The pace of life in China’s Eastern border Tier 1 cities – Shanghai, Beijing and Guangzhou – are very much different from smaller cities in China’s Western provinces. The frantic pace of life and high levels of competition mean that brands may need to adjust their USP or brand propositions by city to consumers with a different lifestyle, different set of priorities, different aspirations and goals, different roles of family (many in the cities are single or are living ‘away from their families’). 

·         In the 2012 McKinsey Chinese consumer report, 52 percent of people surveyed in inland cities cited “importance of reliable brand” as the top buying factor, whereas only 26 percent of consumers in coastal cities agreed with the statement. By contrast, only 6 percent of consumers in smaller cities considered “emotional needs” as important in their purchasing decisions, compared to 36 percent of consumers in coastal cities who believed so.

·         Luxury goods consumption has been slow to filter down from Tier 1 cities to other levels.  In Tier 1 cities such branded goods have taken on strong roles as identifiers or success and taste.  Almost every person in a Tier 1 City feels it is necessary to display some kind of branded purchase or ownership. 

Given the larger population base and the media exposure and familiarity with brands in the major cities, residents in the First Tier cities are relatively more captivated by the appeal of emotional satisfaction rather than brand functionality and tend to be more receptive to new ideas.  

National Representation??

In studies that require a “national” representation, a good mix of different economies as well as wide coverage in geography, the following cities will typically be covered:

·                  Beijing (North)

·                  Guangzhou (South)

·                  Shanghai (East)

·                  Wuhan (Central)

·                  Chengdu (West)

It is important to note that Anovax will also recommend cities according to the specific requirements of a study and provide advice culled from our local knowledge e.g. which cities consume Western confectionery, which cities have strong female opinions, which cities drink brown rather than white liquor, etc.

As you can see, thinking of China as one homogenous market is definitely not a marketing reality!!