I spent last week in China with a global publishing and direct marketing specialist who were researching the market to establish the potential for their products and capabilities. We visited Shanghai, Nanjing and Beijing, met with a number of Chinese publishers and spent time on the ground observing the changing dynamics of China's retail and publishing market. Here are my high level observations on China's retail sector, which is very relevant to all foreign retailers and other businesses looking to tap into China's domestic consumption boom: 1. Chinese consumers are converging into global consumers. Walking around the hyper-markets of Shanghai, the book stores of Beijing and reviewing the retail numbers in at least the first tier cities, I can confirm that Chinese shoppers look, behave and act very much like consumers in most other cities around the world. They are perhaps more price sensitive than some and they are still learning how to sift through the vast range of products and brands available but they are all out there buying foreign brands, comparing prices and spending their money on products that look remarkably similar to the ones we buy in supermarkets and retail shops throughout the world. 2. Chinese companies are very open to new ways of doing things. Even state-owned enterprises appear to be embracing new ideas and business concepts which have worked in other parts of the world, adapting them to suit the local conditions. I was impressed by how open, warm and interested our hosts were in the new ideas presented to them, and how willing they were to share information, market knowledge and ideas. 3. Everything is changing very quickly and it's dangerous to make too many assumptions from a distance. You must be on the ground in China, talking to people and kicking the tyres, to understand how quickly things are changing and how local players are moving the market and increasing the barriers to entry for future aspirants. Whenever you think you really understand something, you find an exception to the rule, a local who has found a way to do something that was previously considered impossible, or the market has moved to a new place. A good example of this is the huge development of the online channel, which is changing the face of the retail market. In densely populated cities, where leisure time is scarce and quality of life poor, shoppers find themselves spending more time online than might be expected in other countries. 4. China is spending billions to export its culture, information and news to the rest of the world.The 'going out' strategy announced last year to increase Chinese investment, business, exports and trade in other countries is an irresistible force which goes far beyond the investment in Australian resource companies. We will see Chinese entrepreneurs and businesses taking strategic stakes in all kinds of innovative and dynamic foreign businesses and increase their global influence in all sorts of ways. But, just as importantly, and running in parallel with this movement, is the massive commitment to distributing Chinese culture, information and news to the rest of the world to:
- reach out to the Chinese diaspora around the world, re-connect them to the motherland, introduce them to old and new Chinese culture and provide them with access to Chinese news and information free of foreign influence and control;
- encourage foreigners to explore China's deep, rich and unique history and culture in their own way, promote tourism, remove fear and misunderstandings, and present a new image of a country which is making a positive contribution to the development of the human race; and
- distribute Chinese news, information and current affairs to the rest of the world in a way that makes sense to the Chinese Government and is free of foreign influence, interpretation and bias.
5. Aspirational consumers are on the rise. The hot issue in China today is the aspiration that everyone has to improve their own life, to seek a better work/life balance, live a more healthy life and to seek self-enrichment through learning, education, children, leisure time, hobbies, regular exercise, healthy food and a cleaner environment. This is a driving force, not only because of China's poor but developing public health system, but because of the fast growing middle classes that have more money, more time and more incentive to live a long and happy life. Conclusion: I've said this before, but I'll say it again, every Australian company must have a China strategy!