Tuesday, September 8, 2009

Tapping into Chinese market

In any industries, people are trying to tap into Chinese market because of its enormous size and the rapid growth. This growth is seen in tourism as follows:
  • China is the world's second-largest economy and the largest travel market in Asia.
  • the number of Chinese travelling abroad over the past several years, reaching 45 million outbound travellers in 2008.
  • by 2015, the World Tourism Organisation projects that China will send 100 million outbound travellers overseas each year.
  • Less than 2.4% of China's population has travelled overseas, leaving 97% of the market untapped - this suggests huge potential for growth.
  • On average, Chinese spend $5,000 on a tour to Europe and $6,000 on trips to the US, making Chinese the number-one spenders per capita for many destinations.
  • China is currently ranked seventh in travel spending in the world, but is expected to grow to become the world's second-largest market in terms of total travel spending by 2015.
But wait a second, is it that easy to gain Chinese customers to your destination?

I understand Chinese consumer behaviors are elusive. I have observed a flock of Chinese travelers both rich and not-so-rich. They are totally different from American consumers or other Asian consumers.

The way they do business is also different. Luckily, I have friends in China, and without their help, it would be really difficult for me to deal with China market even though I visited China a couple of time and knew a working knowledge of Chinese language. Human connection is quite important in Asia, and in China, the importance to know people is absolute and extreme.

I am taking a marketing class at UCSD Extension, taught by instructor Kelly Chen. In her class, we discussed Chinese consumer behaviors.

What's new with the Chinese consumer
The McKinsey Quarterly

According to this article, Chinese consumers are...
  • price sensitive. sensitive to value for money
  • less loyal to thier preferred brands
  • wary of untried products
  • make purchase decisions at the last minute
  • rely on recommendations from family and friends
  • television advertising is weakening even though is still a prerequisite for entering the market
  • print ads are losing ground
  • sponsorships and the internet are becoming more influential- shows corporate strength
  • 30% of consumers trust only Chinese brands
According to the survey in the article, out of 41 brand managers in China, only 7 percent said they had a good inderstanding of the market, while the majority, 85 percent, professed some understanding but with " a lot... that I still don't know."

Do you understand Chinese market?

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