The following is an excerpt from the full article published by B&T on July 18, 2013

By: Chris Baumann (Senior Lecturer in business at Macquarie University)

Chinese consumers are savvy, and like in most other markets, diverse. A study I recently completed with Dr Hamin, lecturer at Macquarie University, and Professor Tung of Simon Fraser University (SFU) in Canada, revealed how cultural factors play a key role in influencing the purchasing decisions of the Chinese consumer. We established substantial differences in customer loyalty levels comparing the Chinese to the Chinese living overseas and Caucasians in Australia and Canada.

China has a ‘savings culture’ where many people save a high percentage of their wages. This has contributed to more prudent spending not only for the more conservative consumers; influenced by traditional Chinese and Confucian values, but also across the board. In short, the Chinese have a ‘save before you play’ mentality, whereas Westerners often follow a ‘play now, pay later’ approach, resulting in high household debts.

Traditionally, Chinese people have valued the brands with a strong reputation, and have long favoured Western brands from Germany, France and Italy. However, in more pragmatic or commercial consumers, customer loyalty is dropping in favour of a greater interest in comparing products based on value for money and functionality, making brand management much more competitive.

‘Face consumption’, where consumers buy luxury products to improve or keep face, is a trend that can still be observed in China, though it seems to be somewhat on the decline. These social consumers are concerned with what their friends or networks think about their purchase and are often willing to pay a premium for image gains. However, now that East Asia is setting up its own premium brands, for example with Chinese and Korean luxury cosmetics and beauty products, there is stiff competition for expensive European brands.

There are a variety of consumer types in China influenced by cultural and economic aspects. The savvy marketer must aim to understand these consumers and tailor activity to serve them accordingly.

Click here to view the article in its entirety on the B&T website