China, Socialism & Consumer Behavior: Digital revolution drives retail
Chinese companies appear to be taking much more aggressive steps than their foreign counterparts to embrace the Internet as a sales channel, according to a recent survey.
China will become the world’s second-largest consumer market by 2015, not far behind the United States, with enough purchasing power to buy 14 percent of the world’s products, up from 5 percent now, according to research co-conducted by the American Chamber of Commerce in Shanghai (AmCham Shanghai) and Booz & Company, a leading global management consulting firm.
“More than 80 percent of US companies in China are here to serve the Chinese market. The emerging Chinese consumer is a key factor driving that trend,” said Brenda Foster, president of AmCham Shanghai.
While multinational corporations (MNCs) overwhelmingly view building brand loyalty as the cornerstone to success in this fast-growing economy, Chinese enterprises consistently identify information technology (IT) as the main factor affecting consumer behavior.
Chinese respondents overwhelmingly considered IT a dominant force in shaping consumer behavior, with more than 90 percent expecting it would influence 20- to 40-year-olds.
According to the report, most respondents considered shopping on the Internet and cell phones, as well as through gaming and social networking sites, as an important means of influencing the mindset of the emerging consumer class.
To address this rising tendency, 93 percent of Chinese respondents said they are already or will soon be involved in e-commerce. By comparison, 41 percent of their foreign competitors said they have not yet implemented an online shopping strategy, or have no plan to do so.
More than twice as many Chinese companies as MNCs reported that at least 11 percent of their revenue comes from technology-enabled transactions.
MNCs’ seemingly less-aggressive stance in digital marketing can be partially attributed to the need for fast-cycle, localized approaches to succeed in the Chinese digital marketplace.
Many multinationals have to coordinate and link closely with their global e-commerce strategy and have less freedom to act locally and rapidly, said Andrew Cainey, managing director of Booz & Company, Greater China.
Meanwhile, most MNCs said the dominant trend is a change in consumer expectations buoyed by an increase in external exposure through travel abroad or overseas experience.